The economic contribution of small to medium-sized grocery ...

National Association of Retail Grocers of 

Australia 

The economic contribution of small to 

medium-sized grocery retailers to the 

Australian economy, with a particular 

focus on Western Australia 

June 2007

Disclaimer 

This Report has been prepared by PricewaterhouseCoopers (PwC) at the request of the National 

Association of Retail Grocers of Australia (“NARGA”) in our capacity as advisors in accordance with the 

Terms of Reference and the Terms and Conditions contained in the Consultant Agreement between 

NARGA and PwC. 

The information, statements, statistics and commentary (together the “Information”) contained in this report 

have been prepared by PwC from publicly available material and from discussions held with NARGA. The 

Consultants may in their absolute discretion, but without being under any obligation to do so, update, amend 

or supplement this document. 

The Information contained in this report has not been subject to an Audit. The information must not be 

copied, reproduced, distributed, or used, in whole or in part, for any purpose other than detailed in our 

Consultant Agreement without the written permission of NARGA and PwC. 

Comments and queries 

can be directed to: 

Scott Lennon 

Partner 

IGU Economics – National 

PricewaterhouseCoopers 

201 Sussex Street 

Sydney NSW 2000 

Phone: (02) 8266 2765 

Email: scott.lennon@au.pwc.com

Acronyms 

Acronym 

ABARE 

ABS 

ACCC 

ACT 

ASX 

AWE 

BRW 

CPI 

FTE 

FUM 

GDP 

GSP 

GVA 

IGA 

IGA>D 

IGP 

IVA 

MGR 

NARGA 

NSW 

NT 

PwC 

QLD 

SA 

SMEs 

SOI 

TAS 

Meaning 

Australian Bureau of Agricultural and Resource Economics 

Australian Bureau of Statistics 

Australian Competition and Consumer Commission 

Australian Capital Territory 

Australian Stock Exchange 

Average Weekly Earnings 

Business Review Weekly 

Consumer Price Index 

Full Time Equivalent 

Funds Under Management 

Gross Domestic Product 

Gross State Product 

Gross Value Added 

Independent Grocers of Australia 

IGA-Distribution 

Industry Gross Product 

Industry Value-Added 

Major grocery retailers (eg Woolworths, Coles) 

National Association for Retail Grocers of Australia 

New South Wales 

Northern Territory 

PricewaterhouseCoopers 

Queensland 

South Australia 

Small to medium-sized enterprises (also referred to as 

independent retailers) 

Southern Oscillation Index 

Tasmania 

TPA Trade Practices Act 1974 

UK 

USA 

VIC 

WA 

United Kingdom 

United States of America 

Victoria 

Western Australia 

The economic contribution of grocery SMEs in Australia and WA 

PricewaterhouseCoopers 27 June 2007 

i

Index of Items 

Item Description Page 

Figure 2.1 Breakdown of components of retail turnover, 2006 5 

Figure 2.2 Grocery store turnover as a proportion of retail turnover 6 

Figure 2.3 Comparison of food price inflation and total CPI 7 

Figure 2.4 Breakdown of food retailing turnover in the year to January 2007 9 

Figure 2.5 

Figure 2.6 

Summary of economic information relating to the supermarket 

and grocery industry 

Breakdown of store numbers and percentage of stores by 

operator across Australia 

Figure 2.7 Geographic spread of population, grocery stores and retail trade 11 

Figure 2.8 

Food retailing employment as a proportion of the total labour 

force 

Figure 2.9 Product segmentation and share of revenues in grocery retailing 13 

Figure 2.10 Growth in market share of Woolworths and Coles, 1975-2006 14 

Figure 2.11 International comparison of grocery market share concentration 15 

Figure 2.12 Comparison of average spending patterns at SMEs and MGRs 16 

Box 1 The “Third Force” in grocery retailing 17 

Figure 2.13 Trend in AWE and the Participation Rate 18 

Box 2 Competition in the grocery retail industry 22 

Figure 2.14 Measuring aggregate economic impacts of SMEs 23 

Figure 3.1 Industry Value-Added by business size in the retail sector, 26 

2004/05 

Box 3 The IGA Network 27 

Box 4 Contribution to retail trade by business size 29 

Figure 4.1 Retail turnover nationwide and in Western Australia 30 

Figure 4.2 Food retailing compared with total retail turnover in WA 31 

Figure 4.3 SMEs as a proportion of total retailer numbers in Australia and 32 

WA 

Figure 4.4 Breakdown of supermarket and grocery retail employment in 33 

Australia and WA 

Box 5 The deregulation debate for trading hours 34 

Figure 5.1 Estimation of business value of SMEs in WA 35 

Figure 5.2 

Comparison of growth rates of the number of businesses in total 

and in retail trade in Australia and WA 

Box 6 Small helping small 37 

Figure 5.3 Comparison of growth rates of the number of employees in total 38 

and in retail trade in Australia and WA 

Figure 5.4 Employment contribution by business size 38 

Figure 5.5 

Comparison of labour intensity in the grocery retail sector, 

2005/06 

Figure 5.6 Comparison of food price inflation in Sydney and Perth 39 

Box 7 Comparative Economic Impacts – SMEs v MGRs 41 

10 

11 

12 

36 

39 



ii

Executive Summary 

Report Objective 

The National Association for Retail Grocers of Australia (NARGA) has commissioned 

PricewaterhouseCoopers (PwC) to assess the economic contribution of small and 

medium-sized businesses (SMEs) in the supermarket and grocery retail industry to the 

Australian economy with a specific focus on Western Australia (WA). The focus on 

the state of WA is due to SMEs having a 32% share of grocery turnover in this state 

compared to the national average SME market share of only 20%. 

This Executive Summary contains a range of statistics. The source of each statistic is 

provided within the footnotes in the core of the report. 

Importance of small and medium-sized businesses 

SMEs across all sectors have played a substantial role in contributing towards wealth 

generation in the Australian economy. SMEs enhance competition and consumer 

choice. It is estimated that the total value of family-owned businesses in 2006 was 

A$4.3 trillion, which represents a greater value than the total of the ASX market 

capitalisation of all listed companies plus the total value of all managed funds in 

Australia. Household expenditure, which represents 60% of GDP, and retail trade, 

which represents 23% of GDP, also play key roles in facilitating sustainable economic 

growth. 

Other key findings on the economic impact and contribution of grocery SMEs to the 

Australian and Western Australian economies are summarised below. 

Sales and retail contribution 

Retailing represents one of the most significant contributors to economic growth. It 

constitutes the culmination of all processes along the supply chain to the final 

customer. Grocery stores are also often the anchor or hub of retail centres, drawing 

customers to shopping areas and sustaining local communities. 

Australia 

 

 

 

The single largest component of expenditure, food and non-alcoholic 

beverages, accounts for approximately 17.1% of total household expenditure 

Supermarket and grocery sector is the largest contributor to retail turnover 

(accounting for 29%, with this consistently growing over the past two decades) 

Retail trade plays a vital role in supporting other Australian industries, including: 

– Specialised industries such as road transport, commercial refrigeration 

and storage 

– Food and beverage manufacturing (which represents 21% of the total 

Australian manufacturing industry) 

– Food wholesaling (which represents 16% total Australian wholesale 

trade). 



iii


 

 

Gross Value Added (GVA) of retail trade, food, beverage and alcohol 

manufacturing, road transport, and transport services and storage was 

approximately equal to over 11% of GDP in financial year 2006, indicating the 

strong economic contribution that retailing and its support services make to the 

national economy 

Revenues generated in the supermarket and grocery sector over the year to 

January 2007 were $63 billion. If sales of groceries outside traditional 

supermarkets are included (eg sales direct from wholesalers to the hospitality 

sector), the total grocery revenues are approximately $74 billion, of which SMEs 

account for approximately $15 billion (as seen below) 

Characteristics associated with market participants in the grocery industry 

Market Participants 

% 

Turnover 

Top 2 – Woolworths & Coles 78-79% 

Top 4 – Woolworths, Coles, ALDI & 

Pick ‘n Pay (Franklins) 

80% 

Independent grocery banner groups – 

IGA, FoodWorks, Ritchies 

18.9% 

Other independent grocery retailers 1.1% 

Stores Turnover FTEs 

1,493 

(24%) 

108,833 

$59 billion 

1,683 

(43%) 

(27%) 

2,140 

(35%) 

144,267 

$15 billion 

3,291 

(57%) 

(53%) 

FTEs per 

store 

65 

32 

TOTAL 100% 6,183 $74 billion 253,100 

 

 

 

 

Around 6,183 supermarket and grocery retailers operate across Australia. Close 

to 73% of these are independent grocery retailers who hold close to 20% 

market share (based on turnover) 

IGA is the largest banner group of independent retailers. However, IGA is only 

one of several large banner groups which include FoodWorks and Ritchies. 

Independent retailers which are part of these banner groups account for around 

18.9% of total market share with 2,140 stores (or 35% of total store numbers) 

around Australia 

Sales increased by 6.3% for IGA stores and by 6.0% for Foodworks stores in 

financial year 2006. This compares favourably with Australian retail sales growth 

of 4.3% 

Industry Value-Added (IVA) for the supermarket industry in 2006/07 is 

estimated at $18.6 billion (or close to 27% of total industry revenues). SMEs 

account for approximately 56% of total retail IVA 


 

 

WA’s Gross State Product (GSP) reached approximately $108 billion as of June 

2006, approximately 12% of Australia’s GDP, with only 10% of the population 

The WA retail market has significantly outperformed the national retail market 

over a 10 year period and food retailing has kept pace with growth in retail 

turnover. The higher rate of retail market growth in WA is due to factors 

including strong commodity prices coupled with population and wages growth 

being generally above the national averages 



iv


Retail turnover nationwide and in Western Australia 

11.0% 

WA Retail as a % of National Retail WA Retail Turnover National Retail Turnover 

WA as % of National Retail Trade 

 

 

 

 

 

 

10.5% 

10.0% 

9.5% 

98 

Jan-2004 Jul-2004 Jan-2005 Jul-2005 Jan-2006 Jul-2006 Jan-2007 

WA retail trade accounts for 11% of total retail turnover in Australia and retail 

employment accounts for 10% of nationwide retail trade employment, 

approximately equal to their contribution to the population 

Retail trade in WA has consistently grown as a proportion of nationwide retail 

trade, growing from approximately 9.8% at the end of 2003, to approximately 

10.9% of total Australian retail trade as at January 2007 

Total retail turnover represents 20% of WA’s GSP in 2006. Across Australia 

retail turnover equates to 23% of national GDP 

The supermarket and grocery trade for the year to January 2007 accounted for 

approximately $6.8 billion in turnover, consistent with the national average of 

approximately 29% of total retail trade 

WA has the highest proportion of independent grocery stores when compared 

with all other Australian States and Territories 

WA grocery SMEs have 32% of share of total grocery turnover and 81% of 

stores. This compares to the national average for SMEs which have 20% of 

total grocery turnover and 73% of total stores 

128 

123 

118 

113 

108 

103 

Index (Jan 2004 = 100) 

SMEs as a proportion of total grocery retailer numbers in Australia and WA 

Australia 


6,183 grocery stores 494 grocery stores 

27% 

19% 

73% 

81% 

SMEs 

20% market share 

MGRs 

SMEs 


MGRs 

Employment generation 

The retail and food sector is the largest employer in the Australian economy. Its 

proportion of the total labour force has risen from 4.7% in 1985 to almost 5.5% in 

2006. 



v


Australia 

 

 

 

Almost 1.5 million people are employed in retail trade, translating into 

1.15 million FTEs 

The supermarket and grocery industry accounts for 26.5% of total retail 

employment and 3.8% of Australia’s total labour force, with 397,198 employees 

or 253,100 FTEs 

SMEs play a vital role in the retail industry, accounting for 57% of total 

supermarket and grocery employment 

Supermarket & 

Total Sector 

SMEs 

Grocery Employment Australia WA WA as % 

of total 

Australia WA WA as % 

of total 

FTEs 253,100 33,310 13.0% 144,267 18,133 12.5% 

Staff 397,198 43,885 11.0% 226,400 23,859 10.5% 

% employed by SMEs 57% 54% 


 

 

 

 

 

WA accounts for around 10% of total retail trade employment – approximately 

proportional to its contribution to the Australian population 

The supermarket and grocery industry accounts for 28% of total retail 

employees, slightly higher than the national average. This represents around 

43,885 employees and 33,310 FTEs 

SMEs play a vital role in the industry, employing 54% of total supermarket and 

grocery employment (slightly below the national average), equivalent to 23,859 

employees or 18,133 FTEs 

Employee growth rates in WA, and the retail industry in WA in particular, have 

been consistently higher than national averages since the early 1980s 

SMEs have relatively higher labour intensity (when measured in terms of FTEs 

per $1 million in sales) than the average levels for all grocery retailers in WA 

and across Australia. 

Comparison of labour intensity in the grocery retail sector, 2005/06 

70 

60 

50 

40 

SMEs in WA 

WA 

SMEs in Australia 

Australia 

30 

20 

10 

0 

FTEs per $1 million sales 

FTEs per store 



vi


Concentration of the retail sector 

Australia has one of the most concentrated grocery markets internationally. The 

dominance of the major grocery retailers (MGRs) is clearly established with the market 

share of the top two MGRs being approximately 78-79%. 

Due to the concentrated nature of the supermarket and grocery retailing sector in 

Australia, MGRs have financial power and growing market power, stemming from their 

high market share. The MGRs, and to a lesser extent the IGA group, utilise economies 

of scale and associated lower unit costs, to offer very competitive prices for high 

volume or headline products bringing benefits to consumers, but there is often less 

discounting applied to lower volume products. This arguably can moderate headline 

grocery price inflation but under state the change in grocery costs when it is measured 

over a large range of grocery products. 

It would be expected that lower unit costs should translate into consistently lower 

prices across a wide range of products for consumers. However, concerns exist that 

the growing market dominance of the MGRs and the decline in the number of 

independent grocery stores over the past decades has arguably moderated 

competition in the grocery industry which has potentially added to food price inflation. 

Whilst the Trade Practices Act 1974 (TPA) prohibits acquisitions which substantially 

lessen competition within defined markets, the nature of this test means that minor or 

so called “creeping acquisitions” by MGRs, (ie purchases of existing independentlyowned 

stores or opening of new stores) are not precluded by the TPA. Hence MGR 

activity in minor acquisitions and new store openings has lifted market share 

concentration in the grocery sector. 

Therefore, SMEs clearly have an important role in promoting and maintaining 

competition in the supermarket and grocery retail industry and the economic 

efficiency, consumer choice and quality that are associated with a successful 

competitive industry. 

Economic contribution and wealth creation 

Small enterprises alone represented 96.8% of total retail trade businesses in Australia 

in 1999/2000, demonstrating their strong economic contribution. In addition, small 

businesses which tend to be independently and locally-owned often play a vital role in 

generating and retaining wealth in local economies. 

The business value of grocery SMEs in WA suggests that each independent retailer 

has an average value of $1.615 million. SMEs in WA tend to reinvest most of their 

earnings within the local and WA economies. MGRs are comparatively less likely to be 

reinvest at a local community level and they typically distribute over 60% of earnings 

as dividends to institutional and retail shareholders who are largely on the eastern 

seaboard of Australia. 

The intra-industry flows between retail trade and a diverse range of sectors 

emphasises the important flow-on effects of the retail trade industry. In 1996/97, the 

retail trade sector procured supplies from 90 industries (of a total of 106 as defined by 

the ABS) valued at over $23.3 billion. 

Studies show that although the total wealth contribution of SMEs in the supermarket 

and grocery industry is smaller than that of MGRs on a national aggregate level, the 

wealth contribution to local economies by SMEs can be 2-3 times greater at a local 

level than that of MGRs. This is related to the fact that SMEs source a greater 

proportion of their goods and services from local producers and local serviceproviders, 

and account for a larger proportion of grocery employment than the market 

share they hold, thereby providing relatively more stimulus to local economies. 



vii


Social and community engagement 

Beyond the quantitative economic impacts that SMEs provide, they generate 

significant social and environmental benefits for local communities and states as a 

whole. For example: 

 

 

 

 

 

 

SMEs contribute to community character, cohesion and well-being with most 

SME business decisions being made within the community. The typical high 

street location provides a mechanism for better connecting local communities 

SMEs assist sustainable economic prosperity as locally owned businesses 

generally reinvest a larger share of revenues or profits back into local and State 

economy than MGRs. In addition to keeping more of the profits in a locality, 

they often create opportunities for a variety of other local businesses and 

service-providers and employ more local people in proportion to their overall 

revenues than MGRs 

SMEs (in combination with MGRs), particularly in the retail sector, also provide 

many thousands of entry-level employment opportunities, and contribute to the 

development of transferable job skills (eg communication skills) and valuable 

attitudes to work and personal development 

The ability to establish an SME promotes entrepreneurship facilitating the 

opportunity for all socio-economic groups, particularly lower income groups, to 

apply economic innovation to create business value 

SMEs enhance competition and consumer choice 

SMEs provide environmental benefits and sustain local environments by helping 

maintain town centres. The presence of a larger proportion of SMEs on High 

Street locations which have higher levels access via walking means that many 

SMEs also make a contribution to reducing traffic congestion, car parking 

shortfalls and pollution. 

Future opportunities 

SMEs are important for sustaining competition, enhancing consumer choice and 

moderating long-term grocery price inflation. The ability of SMEs to provide value-add 

to consumers often through factors such as convenience, tailored product range, more 

personalised service and customised store layout for local needs will be critical to their 

ongoing economic participation and success. 

The greater market share of independent grocers in WA (32%) provides higher local 

employment and statewide economic benefits than if grocery retailing transitioned to 

the national average where independent grocers have a 20% market share. For 

example, if the market share of independent grocers in WA fell from 30% to 20% (all 

else held equal), this could translate into approximately 3,800 fewer jobs in the 

grocery retailing sector in WA. 1 

1 This figure is calculated on the basis that if SMEs were to lose 10% market share in WA (or one-third of their market 

share), SME head count would reduce by a similar proportion (or 6,044 FTEs). This loss in employment would be mitigated 

by an increase in employment by MGRs proportionate to the 10% increase in market share (or 2,168 FTEs). Despite this, a 

net loss in employment of 3,876 FTEs (6,084 less 2,168) would be likely to result if the market share of independent 

grocery retailers reduces from approximately 30% to 20%. 



viii


Furthermore, a decrease in independent grocery market share would also have 

detrimental impacts on businesses which support independent grocery retailers (e.g. 

local accountants, local printers, smaller primary producers and local storage, 

warehousing and wholesalers). Most of these support services would be likely to be 

procured interstate or centrally by MGRs. Therefore, the local businesses and 

employees supported by independent retailers, and the communities in which 

independent grocery retailers operate who gain significant social and community 

benefits as a result of the economic participation of SMEs, would be adversely 

impacted by any reduction in their market share. 

While there are risks associated with operating in one of the most concentrated 

grocery retail markets in the world, the rationalisation of SMEs into banner groups 

such as IGA and FoodWorks and their alliance with Metcash may offer an opportunity 

for independent retailers to challenge the MGRs. PwC’s 2007 publication of Retail & 

Consumer Outlook Australia – Changes in play highlights that: 

“While independent retailers can feel confident that they have a bright future, 

they still have to plan how they will deal with the tectonic forces generated by 

Australia’s two grocery retailing giants.” 

It is important that policymakers are cognisant of the policy settings pertinent to the 

retailing industry. This will be critical to ensuring that competition is promoted in the 

grocery industry and that competitors are not disadvantaged by the extending 

dominance of MGRs under pressure to deliver increased earning. 

In addition, particularly in the retailing sector, SMEs are disproportionately burdened 

by compliance imposts and regulatory requirements. Due to the cumulative economic 

size of SMEs, reductions in “red tape” could be expected to deliver significant 

productivity and other net benefits to the Australian economy. 

It is also important that the significant beneficial economic impact of SMEs is 

acknowledged and appreciated. Whilst it may be a small component of the total 

economy and MGRs generate significantly greater volumes of sales, SMEs constitute 

the majority of grocery stores and make a critical contribution in their own right to 

servicing customers in more regional and remote areas, as well as providing greater 

choice for consumers. Independent retailers have an economically valuable role as a 

balancing competitive force against the MGRs and as enhancers of consumer choice 

and welfare in the grocery retailing industry. 



ix

Contents 


iii 

1 Introduction 2 

1.1 Context 2 

1.2 Purpose 2 

1.3 Definitions 3 

2 National overview of the retail and grocery industries 5 

2.1 Characteristics of the retail & grocery sector 8 

2.2 Recent Trends 14 

3 National economic impact of SMEs and grocery SMEs 25 


4 Grocery retailing in Western Australia 30 


5 Economic contribution of SMEs in WA 35 


5.2 Recent Trends 39 

5.3 Local economic impacts 40 

5.4 Social and community benefits of SMEs 42 

6 Conclusion 44 

Appendix A Intra-industry flows into retail trade 46 



i

1 Introduction 

1.1 Context 

The retail grocery industry in Australia is a vital component of the national economy. 

This sector in the economy is currently represented by the National Association of 

Retail Grocers of Australia (NARGA), a body that promotes the interests and the 

concerns of independently-owned small and medium-sized businesses (also known as 

small to medium-sized enterprises or SMEs), most of them grocery retailers. 

NARGA is a federation of State-based retailer associations in each Australian State 

and Territory. These are: 

 

 

 

 

 

 

 

IGA Retail Network (Independent Grocers of Australia) 

Retail Traders and Shopkeepers Association of New South Wales 

Master Grocers Australia 

Queensland Retail Traders & Shopkeepers Association 

WA Independent Grocers Association 

State Retailers Association of South Australia 

Tasmanian Independent Retailers 

NARGA’s role is to represent independent retailers’ interests across the board. 

NARGA also ensures that the point of view of independent grocery retailers, who seek 

a chance to compete freely in the market place, is expressed through submissions to 

parliamentary and bureaucratic inquiries. 

As a result of this representative role, NARGA has demonstrated a keen interest in 

exploring the economic contribution of SMEs to the Australian economy and Western 

Australia (WA) in particular which has a higher market share for SMEs in grocery 

retailing compared to the national average. Reviews of other State economies may be 

undertaken at a later date. 

1.2 Purpose 

The purpose of this report is to assess the economic contribution, role and impact of 

SMEs in the supermarket and grocery retail industry within the Australian economy. 

The emphasis of the latter part of the report is the economic contribution of SMEs in 

WA, where SMEs form the highest proportion of the retail grocery trade of any other 

Australian State or Territory. The study will analyse each area of interest in the 

Australian context, with additional detail provided in the WA context. 

The economic contribution of grocery SMEs in Australia and WA 2 

PricewaterhouseCoopers 27 June 2007

Introduction 

1.3 Definitions 

1.3.1 Grocery retail 

The focus of this report will be the supermarket and grocery retailing industry. 

ACNielsen defines grocery retail as all branded packaged groceries (ie dry goods) 

excluding housebrands. This report will adopt this definition with a key difference in 

that housebrands or private labels will be examined as a component of growing 

importance and relevance in the grocery retail industry. 

For the purposes of this report it is assumed that liquor products, fuel and petroleum 

products, takeaway, restaurant and other food retailing products, are all sold outside 

the grocery retail sector. However, these retailing components may be referred to 

throughout the report. 

Goods retailed by the supermarket and grocery industry may also be purchased from 

a range of over 30,000 other stores in a variety of industries, including: 

 

 

 

 

 

 

 

 

 

 

 

 

convenience 

fruit and vegetable 

bread and cake 

automotive fuel 

newspaper, book and stationery 

takeaway food 

fresh meat, fish and poultry 

pharmaceutical, cosmetic and toiletry 

Department stores 

milk vending operators 

other specialised food stores 

Boutique or specialist independent retailers (eg delicatessens, niche food 

importers, organic specialists, fruit, meat and seafood markets). 

Therefore, small independent convenience stores, and other similar corner and 

general stores selling grocery products are considered to form part of the grocery 

retailing sector. This is an important condition when considering the number of stores 

in the industry. 



Introduction 

1.3.2 Small to medium-sized enterprises (SMEs) 

According to the Australian Bureau of Statistics (ABS), a small business is defined as 

business employing less than 20 people. The categories of small business include: 

 

 

 

non-employing businesses – sole proprietorships and partnerships without 

employees 

micro businesses – businesses employing less than 5 people, including nonemploying 

businesses 

other small businesses – businesses employing 5 or more people, but less than 

20 people. 

Medium-sized businesses refer to businesses employing 20 or more people, but fewer 

than 200 people. 

The focus of this report is both small and medium-sized enterprises in the retail 

grocery sector, as the majority of independent grocers are categorised either as small 

or medium-sized enterprises. 2 SMEs refer to small and medium-sized grocery retailers 

are this term is interchanged with the term ‘independent grocery retailer’. SMEs in the 

grocery retail sector are generally characterised by independent ownership, and 

independent control over decision-making and operations by store management. 

2 It should be noted that most independent grocers are either small businesses towards the large end of the spectrum, or 

medium-sized businesses towards the smaller end of the spectrum within the definition. 



2 National overview of the retail and grocery 

industries 

Retailing is where enterprise meets household and community. It is where the 

value-added of the extraction, processing, manufacturing, wholesaling and 

distribution chain culminates with sales to the final customer. 3 Therefore, the 

retail grocery industry plays a key role in facilitating sustainable economic 

growth in Australia. 

Household consumption comprises approximately 60% of Australian GDP, valued at 

close to $934 billion in 2006. 4 Retail trade, and grocery expenditure in particular, 

represent a core feature of this discretionary spending component. 

Retail trade alone accounted for approximately 23% of GDP in 2006. 5 Food and nonalcoholic 

beverages account for 17.1% of total household goods and services 

expenditure. This component constituted the single largest category of average 

weekly household expenditure. 6 

The supermarket and grocery sector is the largest segment of retail turnover in 

Australia, contributing approximately 28% of total retail expenditure (see Figure 2.1 

below). This figure now stands closer to 29%. Total food retailing (including grocery 

trade) comprises approximately 40% of total retail trade, by far the largest component 

of expenditure. 

Figure 2.1: Breakdown of components of retail turnover, 2006 

Recreational 

Good Retailing 

4% 

Other Retailing 

10% 

Hospitality and 

Service 

Industries 

16% 

Household 

Good Retailing 

15% 

Supermarket & 

Grocery 

Retailing 

28% 

Other Food 

Retailing 

12% 

Clothing and 

Soft Goods 

7% 

Department 

Stores 

8% 

Source: ABS Cat. 850101 

3 Institute for Local Self-Reliance, The New Rules Project, available at http://www.newrules.org/misc/whynewrules.htm. 

Accessed 12 April 2007. 

4 Seasonally adjusted data has been used where available. Australian Bureau of Statistics (ABS), Catalogue (Cat.) 

5206006. Calculated according to an Industry Gross Value-Added measure. 

5 ABS, Cat. 850101 & 526006. Retail trade calculated on the basis of Industry Turnover, GDP calculated according to 

Gross Value Added to the economy. 

6 ABS, Cat. 65300 “Australia Data 2003-04rev”. 



National overview of the retail and grocery industries 

The proportion of retail trade represented by supermarket and grocery expenditure 

has been consistently growing over the past two decades, as shown in Figure 2.2. 

This may be due to the increased product range available at supermarkets. For 

example, the proportion of retail trade contributed by Department stores and 

newspaper and stationery retailers has shown a sustained decrease over a similar 

period. This suggests that their products are no longer exclusively available in their 

stores and supermarket retailers are expanding their product ranges to attract greater 

sales. 

Figure 2.2: Grocery store turnover as a proportion of retail turnover 

31% 

30% 

% of Total Retail Turnover 

29% 

28% 

27% 

26% 

25% 

24% 

23% 

22% 

Apr-82 Apr-85 Apr-88 Apr-91 Apr-94 Apr-97 Apr-00 Apr-03 Apr-06 


This greater product choice and cheaper pricing on some core headline products in 

supermarkets may be an attempt by grocery retailers to increase market share by 

becoming a “one stop shop” for both basic and more advanced product needs. This in 

turn may be acting as a means to increase the market share of the grocery industry as 

a component of retail trade. 

In addition, food is one of the largest contributors to growth in the CPI. As 

demonstrated in Figure 2.3, food prices have consistently grown at a higher rate than 

the CPI and in the most recent years food price inflation has risen significantly. 

Therefore, it appears that food price inflation has potentially boosted supermarket and 

grocery store turnover as a proportion of total retail turnover. 

There are also suggestions that the measured level of food price inflation may 

underestimate the true rise in the cost of grocery goods. That is, the MGRs may be 

running “loss leaders”, or providing lower prices, on high volume food staples included 

in the CPI food basket, thereby hiding the rise in prices of other grocery goods which 

are growing at a greater rate. 

Furthermore, over certain periods of sustained drought, as measured by negative 

values for the Southern Oscillation Index (SOI), there has been rising food inflation. 7 

However, there does not appear to be any consistent pattern or correlation between 

negative SOI values and food inflation. 

7 The Southern Oscillation Index (SOI) as measured by the Bureau of Meteorology is calculated from the monthly or 

seasonal fluctuations in the air pressure difference between Tahiti and Darwin. Sustained negative values of the SOI often 

indicate El Niño episodes. These negative values are usually accompanied by sustained warming of the central and 

eastern tropical Pacific Ocean, a decrease in the strength of the Pacific Trade Winds, and a reduction in rainfall over 

eastern and northern Australia. Therefore, the SOI has a strong correlation with drought conditions. 




Figure 2.3: Comparison of food price inflation and total CPI 

10% 

Periods of drought according to SOI % change in Food % change in Total CPI 

9% 

Cumulative Food Inflation Total CPI 

Percentage change from previous 

period (%) 

8% 

7% 

6% 

5% 

4% 

3% 

2% 

1% 

0% 

90 

-1% Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 


The economic contribution of the supermarket and grocery retail industry is not 

confined to the revenues and employment generated in supermarket stores alone. Its 

contribution incorporates the entire value or supply-chain servicing this industry. This 

is particularly relevant in rural and regional areas where grocery stores play an even 

greater role in supporting local primary producers and downstream suppliers. 

Derived demand for the products of primary producers, manufacturers and 

wholesalers is heavily dependent on the retail industry. These industries form part of 

the supply-chain for the retail industry, and benefit from the success and sustained 

growth of a wide range of diverse supermarket retailers. 

In addition, the decisions by a large number of retailers (varying in terms of size and 

demand) to source supplies from Australian producers and manufacturers play a 

pivotal role in the viability of many smaller primary producers and the continuing health 

of the Australian food manufacturing sector. 

The food and beverage manufacturing industry is the largest component of the 

Australian manufacturing industry (according to total income), comprising 

approximately 21% of the industry. Similarly, the food wholesaling industry comprises 

approximately 16% of the total wholesale trade, and is the second largest component 

in the Australian wholesaling industry behind machinery and equipment wholesaling. 8 

In addition to the above industries, which are clearly linked with grocery retailing, there 

are a large number of niche industries which are heavily dependent on the grocery 

industry for their livelihood. These industries include: 

CFI 

CPI 

150 

140 

130 

120 

110 

100 

 

 

 

Commercial refrigeration 

Refrigerated road transport 

Refrigerated storage services. 

The combined Gross Value Added (GVA) of retail trade, food, beverage and alcohol 

manufacturing, road transport, and transport services and storage was approximately 

equal to over 11% of Australian GDP in financial year 2006. This provides a broad 

indication of the strong economic contribution that retailing and its support services 

make to the national economy. 

8 As at the end of 2004/05. ABS Cat. 81550. 




2.1 Characteristics of the retail & grocery sector 

2.1.1 Industry participants 

Some of the major grocery retailers (MGRs) operating across Australia include: 

 

 

 

Woolworths 

Coles 

ALDI 

Pick ‘n Pay (which now operates stores under the ‘Franklins’ banner). 9 

The alternative retailers to the major chain supermarkets are primarily SMEs, who 

represent the Metcash customer base. These SMEs are generally part of banner 

groups such as those listed below: 

 

 

 

 

Independent Grocers of Australia (IGA) including Ritchies IGA 

FoodWorks 

Four Square 

SPAR Australia. 

2.1.2 Retail turnover & industry value-added 

It is estimated that the grocery retail industry will account for 1.7% of total Australian 

GDP in 2006/07. 10 Grocery retailing will nonetheless represent the largest component 

of retail industry revenues, currently accounting for approximately 29% of total retail 

expenditure. 

According to the ABS, total retail trade over the year to January 2007 equated to 

approximately $217 billion, of which almost $89 billion comprised total food retailing. 11 

Grocery retailing represented over 70% of the food retailing market (refer to Figure 

2.4). 

9 Pick ‘n’ Pay re-entered the Australian market by purchasing some of the 70 Franklins stores (including 20 Fresco outlets), 

the remainder of which were bought by Woolworths, Coles and Metcash. IBISWorld 2007, Report G5111 “Supermarkets 

and Other Grocery (except convenience) Stores in Australia” 30 January 2007, p. 49. 

10 Gross Value Added (GVA) of the retail trade industry to Australian GDP in 2006 was 5.8%, and grocery retailing 

represents 29% of this total value. According to these estimates, grocery retailing may contribute as much as 1.68% of 

GDP in 2006/07. However, there is an alternative (and more conservative) estimate calculated by IBISWorld that 

suggests the grocery retail industry will account for 0.7% of GDP. IBISWorld has not published or made available the 

basis of its calculation. 

11 Seasonally adjusted, Flow data. ABS, Cat. 850101. 




Figure 2.4: Breakdown of food retailing turnover in the year to January 2007 

Liquor 

7% 

Other Food 

Retailing 

11% 

Takeaway 

Food 

11% 

Supermarkets & 

Grocery Stores 

71% 

Source: ABS Cat.8501019 

The revenue generated by the supermarket and grocery sector in the year to January 

2007 was estimated at $63 billion. 12 

However, the total market for supermarket and grocery goods including other 

specialist stores is likely to be worth up to $74 billion. 13 This estimate is based on the 

suggestions by IBISWorld that the supermarket and grocery industry (in its strictest 

definition) accounts for about 85% of supermarket and grocery items, with the 

remaining 15% derived from sales by other niche retailers. 

Industry Value-Added (IVA) refers to the revenue generated by the operations of an 

industry, less the cost of goods and services used in producing that revenue. 

Therefore, this statistic highlights the economic contribution of the supermarket and 

grocery industry separate from all supporting inputs that help generate final retail 

turnover figure. 

According to estimates derived from ABS figures, IVA from the overall retail industry in 

2006/07 will be close to $64 billion. 14 Hence, IVA from the supermarket and grocery 

industry alone can be estimated at approximately $18.6 billion in financial year 2007. 

This suggests that IVA from the supermarket industry is equivalent to approximately 

29.5% of total annual revenues generated in the industry. 15 

12 ABS, Cat. 8501019. However, IBISWorld suggests that grocery retailing accounted for $57.3 billion in the financial year 

2006 which represents a 5.6% lower estimate than that given by ABS data. This may be a result of classification differences 

or use of original rather than seasonally adjusted data. 

13 According to IBISWorld estimates, expenditure categorised under supermarket and grocery sector turnover is actually 

closer to 85% of the total supermarket and grocery spending in the economy. Therefore, where revenues are estimated at 

$63 billion by the ABS, this would suggest that total revenues were closer to $74 billion. 

14 ABS, Cat. 81550 provides Industry Value-Added statistics from 2001-02 to 2004-05, with an average growth rate of 8.2% 

per annum in the retail trade sector. This average annual growth rate has been applied to 2004-05 figures to extrapolate the 

value of Industry Value-Added into 2006-07. 

15 Where supermarket and grocery industry revenues equal $63 billion, $18.6 billion in value-add constitutes approximately 

29.5%. Where total supermarket and grocery industry revenues equal $74 billion, this value-added statistic falls to 

approximately 25%. According to ABS Cat. 81550, “Food Retailing” in 2004-05 constituted approximately 31% of the retail 

trade value-added. 




However, the retail grocery industry is a mature industry in which margins have 

generally remained low and stable, and where volume is what generates profitability. 

Consequently, it is estimated by IBISWorld that the Industry Gross Product of the 

supermarket and grocery industry will grow at a modest average real annualised rate 

of 1.5% per annum, in comparison to anticipated Australian economic growth of 3.2% 

per annum, in real terms. 16 Recent trends suggest that the MGRs are increasingly 

entering other markets (such as liquor, petrol, hotels, pubs and gaming) in order to 

grow sales and total earnings. 

A summary of the information provided on this page is outlined in the Figure 2.5 

below. 

Figure 2.5: Summary of economic information relating to the supermarket and grocery industry 

Economic Information – Supermarket & Grocery Industry 

Revenues – supermarket & grocery industry (according to ABS definition) – 

– IBISWorld indicates this value is 85% of Total Revenues 

Total Revenues – total market for supermarket & grocery goods 

Industry Value-Added – supermarket & grocery industry 

– equal to 29.5% of Revenues 

Industry Gross Product – supermarket & grocery industry growth rate 

– lower than predicted Australian GDP growth of 3.2% 

Data Results 

$63 billion 

$74 billion 

$19 billion 

1.5% 

However, the ACNielsen Grocery Report 2006 indicated that the grocery sector 

outlook remained “cautiously optimistic” with the annual growth trend expected to 

move steadily towards 5% (nominal, or approximately 2.5% real), following two years 

of average growth sitting close to 4% per annum (nominal). 

2.1.3 Retailer numbers & geographic distribution 

It is estimated that approximately 6,183 grocery retailing stores operate nationwide. 17 

Figure 2.6 provides an indication of the distribution of these stores between different 

operators and banner groups. All those segments outlined in dark blue indicate 

independent grocery stores. 

The MGRs have a low percentage share of total stores but a very high share of sales; 

whereas the independent retailers have a high percentage of stores but a lower share 

of total sales. Combined, the MGRs constitute approximately 27% of the total number 

of grocery stores nationwide, although they account for approximately 80% of total 

sales revenue. IBISWorld highlights that this phenomenon is related to the size of 

stores and the buying strength of these major chain operators. For example, large 

property and shopping mall developers are not often willing to lease to independent 

retailers with the majority of prime sites or anchor tenancies going to MGRs for a 

variety of reasons. 

16 IBISWorld 2007, Report G5111, p. 10. 

17 This figure is approximately 40% larger than ABS estimates. However, industry analysis suggests that ABS and 

IBISWorld data which claims approximately 4,350 grocery stores operate Australia-wide may underestimate the number of 

grocery retailing stores on a national level. This may be due to lack of participation in ABS business surveys by smaller and 

especially remote businesses and the categorisation of “grocery” potentially not including small general corner and 

convenience stores which are primarily grocery providers, green grocers expanding into provision of grocery goods, and 

niche or boutique grocery providers. This higher figure is an estimate that has been generated from combining IBISWorld, 

Metcash, Woolworths, Coles and other publicly available information. 




Figure 2.6: Breakdown of store numbers and percentage of stores by operator across Australia 

Boutique and niche retailers, 

small corner grocery stores, 

and fresh food retailers 

Major Grocery Retailers 

(MGRs) 

Woolworths, 

756 stores, 12% 

Other Independent 

retailers, 

1,531 stores, 25% 

Coles, 


Metcash supplied 

independent 

retailers, 


IGA, 

1,209 stores, 20% 

ALDI, 


Pick 'n Pay, 


Mainly Metcash supplied 

SPAR, 


FoodWords / AUR, 


Source: ABS, IBISWorld, Metcash, Coles and Woolworths 2006 Annual Reports 

Grocery stores are spread across Australia approximately in proportion with 

demographic trends such as geographic distribution and population growth. The 

general geographic distribution of retail turnover or expenditure between the States 

and Territories as of January 2007, is shown in Figure 2.7. 

Figure 2.7: Geographic spread of population, grocery stores and retail trade 

35% 

30% 

% Resident Population % Grocery Stores % Retail Trade 

25% 

20% 

15% 

10% 

5% 

0% 

NSW VIC QLD SA W A TAS NT ACT 

Source: IBISWorld, ABS Cats. 850104 & 310104 

NSW and Victoria, the two largest states by population, have a lower proportion of 

grocery stores in comparison to the level of retail trade and population they represent. 

The reverse is true in Queensland and South Australia. This phenomenon is related 

to the fact that fewer larger stores operate in metropolitan areas, whereas a larger 

number of smaller stores operate in states with highly dispersed rural and regional 

centres. For example, MGRs continue to be most dominant in the larger states such 

as NSW, with 84.6% market share in terms of retail turnover as at September 2006. 18 

18 ACNielsen Grocery Report 2006, p. 12. 




2.1.4 Employment Contribution 

The retail industry is the largest employer in the Australian economy, employing 

approximately 14.4% of the total Australian labour force. In total, the retail industry 

employs approximately 1.5 million people or approximately 1.15 FTEs. 19 

Employment in the food retailing industry has remained a relatively steady proportion 

of the total Australian labour force, although it has exhibited a mild increasing trend 

over the past two decades, as shown in Figure 2.8. The growth of food retailing has 

occurred at a time where industries such as motor vehicle retailing and communication 

services have declined as a proportion of the total labour force. 

Figure 2.8: Food retailing employment as a proportion of the total labour force 

6.0% 

5.5% 

5.0% 

4.5% 

4.0% 

Feb-85 Feb-87 Feb-89 Feb-91 Feb-93 Feb-95 Feb-97 Feb-99 Feb-01 Feb-03 Feb-05 Feb-07 


In addition, a recent article in BRW indicated that MGRs have reduced their employee 

numbers whilst increasing turnover. The article from late 2006 stated that: 

“In spite of increasing its revenue by 75 per cent since 2001, Woolworths has 

cut its workforce by 27% or 35,592 people [over the past 5 years]. Retail rival 

Coles has also slashed its workforce over the past five years, down from 

160,000 in 2001 to 94,000…[in 2006].” 20 

This suggests that SMEs may be playing an increasingly important role in relation to 

employment growth in the supermarket and grocery industry, and employing a 

growing percentage of total food retailing employment. 

IBISWorld estimates that the grocery retailing sector will employ approximately 

253,100 FTEs in 2006/07. ABS suggests that as at February 2007, the supermarket 

and grocery retailing industry employs approximately 397,198 employees (full-time 

and part-time) or 26.5% of total retail employment. 21 Overall, the grocery retailing 

industry alone employs approximately 3.8% of Australia’s total labour force. 22 

Approximately 51% of employees work in a full-time capacity in the supermarket and 

grocery retail industry, with the remainder employed through a part-time or casual 

basis. 23 

19 As at February 2007. ABS Cat. 6291.0.55.003, Table 4. FTEs calculated on the basis of full-time employees plus 50% of 

part-time employees. This is the calculation technique used by the ABS. 

20 Thomson J. (2006), “Lean and Hungry at Work”, Business Review Weekly, November 9-December 13, 2006. 

21 ABS, Cat. 6291006. This figure is based on supermarket and grocery retail employment constituting 70% of total food 

retailing employment figures. Further to this, an alternative calculation suggests that the proportion of total retail FTEs that 

the supermarket and grocery industry represents (according to FTEs) is closer to 22%. 

22 ABS, Cat. 6291006. 

23 Ibid. 




2.1.5 Product Range 

The industry offers a variety of brand packaged and fresh grocery goods. An 

indication of the product share in the supermarket and grocery sector is provided in 

Figure 2.9 below. 

Figure 2.9: Product segmentation and share of revenues in grocery retailing 

Other goods 

20% 

Fresh fruit and 

vegetables 

10% 

Breads, cakes, 

cereals, biscuits and 

baking mixes 

10% 

Other paper products 

3% 

Medical, 

pharmaceutical and 

cleaning products 

6% 

Cosmetics, perfume 

and toiletries 

4% 

Source: IBISWorld 

Cigarettes & tobacco 

products 

6% 

Other food products 

7% 

Prepared animal and 

bird food 

3% 

Fresh meat, bacon, 

ham & smallgoods 

10% 

Canned food 

6% 

Soft drink, cordials & 

syrups 

4% 

Milk, cream, cheese, 

ice cream & frozen 

confectionery 

8% 

Confectionery, etc 

3% 

In addition, while a considerable share of grocery merchandise is a product of 

Australia (as defined by the Trades Practices Act 1974), 24 imported products and 

international suppliers are becoming a more important part of the grocery industry. 

Retailers are pursuing importation of produce to build margins and control costs, 

motivations which are similarly driving the strategy to develop private labels. 

MGRs are also increasingly stocking products that were previously only found in 

specialty stores (eg Asian and Mediterranean ingredients). MGRs are gradually 

sourcing a higher proportion of produce from international, rather than Australian, 

suppliers. This trend could potentially affect the success and continued livelihood of 

local producers and manufacturers. 

24 Section 65AC of the TPA outlines the “Test for representations that goods are product of/produce of a country”. It states 

that If: 

(a) a corporation makes a representation that goods are the produce of a particular country (whether the representation 

uses the words "product of", "produce of" or any other grammatical variation of the word "produce"); and 

(b) the country was the country of origin of each significant ingredient or significant component of the goods; and 

(c) all, or virtually all, processes involved in the production or manufacture happened in that country; 

the corporation does not contravene section 52, paragraph 53(a) or (eb) or paragraph 75AZC(1)(a) or (i) by reason only of 

making the representation. That is, if these conditions are satisfied, the representation will not be considered to be 

misleading or deceptive in nature. 




2.2 Recent Trends 

Over the past 30 years, the supermarket industry has become highly price competitive 

for a limited number of high volume headline products (but often with minimal 

discounting of lower volume products), effectively ‘training’ consumers be to price 

conscious. Other major retailers market themselves on having lower prices for their 

whole range of products on a permanent basis. This has seen MGRs gain market 

share and increase their economies of scale, resulting in significant rationalisation of 

industry enterprise numbers. This trend has been reinforced due to the large industry 

players growing via acquisition and new store openings, and with independent grocers 

and supermarkets joining together to form co-operatives or buying groups. 

2.2.1 Market share concentration 

Since the early 1990s, the supermarket industry has undergone significant 

restructuring. Australia’s grocery market has become one of the most concentrated in 

the world. Current ACNielsen estimates indicate that the two major supermarket 

chains, Woolworths and Coles, have approximately 78-79% of the market. 25 The 

Australian market share growth of these two key MGRs over the past three decades 

has been significant – growing from approximately 35% to around 79%, as shown 

below in Figure 2.10. 

Figure 2.10: Growth in market share of Woolworths and Coles, 1975-2006 

80 

70 

Woolworths 

Coles 


Percentage Market Share (%) 

60 

50 

40 

30 

20 

10 

Coles ~ 34% 

Woolworths ~ 44% 

0 

1975 1978 1981 1984 1987 1990 1993 1996 1999 2005 2006 

Source: Retail World, ACNielsen 

This market dominance entails certain benefits and risks, as shown below: 

 

 

Benefits – including economies of scale and reduced unit costs for businesses, 

hopefully translating into lower prices for consumers 

Risks – that such powerful companies might misuse their position against 

suppliers and smaller competitors. 

Anecdotal evidence suggests that the dominance of the MGRs is continuing to grow, 

especially due to their entrance into the fuel market through petrol provider alliances 

that have allowed the major retailers to open a large number of convenience stores. 

However, the MGRs often report lower market share statistics using a ‘whole-ofstomach-approach’. 





This approach includes takeaway food and other food retailing, liquor products, fuel 

and all other products that consumers eat across the economy to calculate market 

share rather than on the basis of supermarket consumption alone. 

In support of the growing dominance of the MGRs, The Australian Financial Review 

recently indicated that Woolworths’ dominance was growing in the industry and that its 

cash registers alone collected approximately 18.8% of nationwide average monthly 

retail sales (ie includes non-grocery retail expenditure). 26 

The degree to which Australia’s retail grocery sector is one of the most concentrated 

in the developed world is emphasised by Figure 2.11. The Australian grocery market 

is a significantly smaller market than the USA and the UK, and is therefore generally 

more prone to greater concentration. A publication by the ABARE in May 2005 

indicated that market share of the top five competitors in the retail food markets of 

countries such as Canada and Singapore were as low as 55% and even lower in 

South-East Asian nations such as Thailand, Philippines and Malaysia. 27 

Figure 2.11: International comparison of grocery market share concentration 

Country 

Market Share 

Top 2 No. 3, 4 & 5 Top 5 

Major Players 

Australia 79% 28 +7% 86% 29 Ritchies, ALDI, 

Woolworths, Coles, 

Franklins 

United Kingdom 30 48% +32% 80% 

Tesco, Sainsbury, 

Asda (Wal-Mart), 

Morrisons, Somerfield 

USA 20% 31 +22% 42% 32 Wal-Mart, Kroger Co 

In a market where the top two players hold 80% market share, there is likely to be a 

different supplier-retailer competitive positioning than in a market where the top two 

players hold 50% market share. The expected result of such a significant degree of 

grocery market share concentration, such as that which exists in Australia, is a shift in 

price negotiating power towards large retailers (ie the MGRs). 

In the UK, the Office of Fair Trading has continued to come under heavy attacks in 

recent years from consumer groups and the government's National Audit Office for not 

taking a proactive approach to the effect the big four supermarkets have on the 

grocery sector. 33 Concerns in the USA about Wal-Mart’s dominance are also well 

publicised. 

26 Jury, A. 2007, “ACCC obstacle on road to domination”, The Australian Financial Review, 18 April 2007, p. 49. 

27 Jacenko, A. & Gunasekera, D. 2005, “Australia’s retail food sector: Some preliminary observations”, ABARE, The Pacific 

Food System Outlook 2005-06, Kunming, China 11-13 May 2005, p. 3. 

28 ACNielsen Grocery Report 2006, p. 12. On the basis that Woolworths and Coles have appropriated most of the 

remaining Franklins stores, the top 2 major retailers now cover the vast majority of the previously top 3 retailer market 

share. 

29 This figure is sourced from 2004. Market Share Matrix Project, 2004. Available at 

http://www.marketsharematrix.org/pdf/RANKING_concentration_retailers_Oceania_per_country_CORRECTED.pdf, 

accessed 12 April 2007. 

30 TNSinfo, “12 week Grocer Share of Trade to 25 th February 2007.xls”, available at 

https://www.tnsinfo.com/TNSInfo/Rooms/DisplayPages/LayoutInitial?Container=com.webridge.entity.Entity%5BOID%5B23 

CDADC3E5AA1C42A6EC5DE7CEE926CD%5D%5D, accessed on 12 April 2007. 

31 Wal-Mart market share is estimated at approximately 15.5% and is approximately 4 times as large as its closest rival, 

Kroger Co.. Sourced from Planet Retail, “North American Retailers Combat Wal-Mart with Diverse Store Formats, 

According to Planet Retail's Latest Ranking”, 31 August 2006. Available at 

http://www.planetretail.net/Home/PressReleases/PressRelease.aspx?PressReleaseID=48709, accessed 12 April 2007. 

32 Mitchell, S. 2003, Institute for Local Self-Reliance, “10 reasons why Vermont’s homegrown economy matters, and 50 

proven ways to revive it”, Preservation Trust of Vermont, October 2003 

33 BBC News, “Supermarkets face dominance probe”, 9 March 2006. 




However, the nature of the dominance of the top two major retailers in Australia is 

stronger. There are suggestions that Coles and Woolworths do not often compete in a 

single shopping area and effectively provide a similar offering to consumers (ie 

promote themselves as providers of fresh grocery products with low prices on a 

selection of core goods). This indicates that potentially there should be greater 

concern and interest in Australia in the future implications of such high market 

concentration on competition and consumer welfare in the supermarket and grocery 

market. 

2.2.2 Spending patterns 

It is anticipated that spending patterns differ considerably between independent 

retailers and MGRs. Anecdotal evidence suggests that consumers spend smaller 

amounts more frequently at independent local retailers, with the average spend being 

less than $30. 34 

However, the average spend at a major chain retailer is likely to be larger, but less 

frequent. Average weekly household expenditure on food and non-alcoholic 

beverages is estimated to be equal to approximately $145, and this figure is higher for 

families with children. 35 It is estimated that households that spend a larger proportion 

of this figure in a single visit to the supermarket are more likely to do so at an MGR. 

An example of the potential distribution of grocery spending at independent retailers 

and major chain stores, shown below in Figure 2.12, may better illustrate the possible 

difference in spending patterns that exist between SMEs and MGRs. 

Figure 2.12: Comparison of average spending patterns at SMEs and MGRs 

Frequency of 

Average 

Spend 

SME = $25 

MGR = $40 

MGR spend > $100 = 10% of total visits 

SME spend > $100 =


Box 1: The “Third Force” in grocery retailing 

Metcash Ltd – IGA-Distribution & Campbell’s Wholesale 

Metcash Ltd generated $8.2 billion in sales in financial year 2006 and has established itself as a viable “third 

force” in the grocery sector through its IGA-Distribution (IGA>D) and Campbell’s Wholesale divisions. 36 

Metcash is primarily a grocery wholesaling and distribution business that has created a strong alliance with 

the FoodWorks and IGA networks, other independent retailing banner groups and individual grocery stores, 

actively promoting itself as the “champion of the independent retailer”. 

Metcash assists in the supply of marketing and distribution expertise to over 2,700 independent grocery 

stores in NSW, ACT, Victoria, Queensland, South Australia and Western Australia. It also operates 12 major 

distribution centres through IGA>D to deliver dry, chilled and frozen groceries. 

In addition to IGA>D, Metcash also operates the Campbell’s Wholesale business. Whilst this business 

segment focuses on convenience stores which would be considered outside the supermarket and grocery 

sector, its Cash & Carry warehouses often service smaller independent grocery stores, or traditionally more 

remote corner and general stores who buy in quantities that cannot be economically serviced through a full 

case grocery or liquor distribution centre and require a total supply solution. 37 

Metcash has 21 Cash & Carry warehouses and 22 regional wholesale distribution warehouses across NSW, 

Victoria, Queensland, South Australia and the Northern Territory, stocking a broad range of groceries, liquor 

and confectionery. 

Entering the retailing market 

Metcash has typically owned between 3-10% of 

independent grocery stores under IGA, FoodWorks 

or other banner groups; primarily new start-ups, 

acquisitions or purchases from existing 

independent retailers. In November 2005, 

Metcash bought 62 Action stores through the 

acquisition of the Foodland Australian businesses. 

The majority of these stores were rebranded under 

the IGA banner and 50 of these were resold in late 

2006 to independent retailers. Metcash retained 12 

stores in Perth, WA. However, recent broker 

reports suggest that these stores are now ready to 

be sold when an appropriate acquiror is identified. 

The Champion of the Independent Retailer 

As the wholesale and distribution arm of independent retailers, Metcash can effectively balance the 

bargaining power of the MGRs. It allows independent retailers to purchase as a single entity at competitive 

wholesale prices and gain the benefit of certain economies of scale that make independent retailing 

financially viable. 

Around 60% of all independent retailers (by store numbers) are directly supplied by Metcash, however 

approximately 95% of independent grocery turnover is potentially sourced from Metcash. Despite this 

dominant position as a wholesaler and distributor for independent grocery retailers, Metcash does not 

require exclusivity of supply for IGA supermarkets. This effectively allows independent retailers to purchase 

products from alternative and local suppliers, such as fresh produce from local farmers. The benefit of this 

flexibility is that SMEs can: 

 

 

customise store layout and tailor product choice to match local tastes 

provide access to local and seasonal produce and continuing support for local industries and producers. 

PwC’s 2007 publication of Retail & Consumer Outlook Australia – Changes in play highlights that 

“distribution networks servicing independent retailers will not only survive but grow stronger”, suggesting that 

the recent success of Metcash will continue into the future. This is particularly true where independent 

retailers are attempting to strengthen their position in the marketplace and challenge the dominance of the 

MGRs by tailoring their stores and product offering to maximise customer convenience and satisfaction. 

36 Metcash also includes Australian Liquor Markets (ALM) which accounts for approximately 29% of sales. However, this 

division is of less relevance to the independent grocery retailing sector. 

37 Metcash Annual Report 2006, p. 10. 




2.2.3 Retailing strategies 

Fresh food retailing 

IBISWorld suggests that the MGRs are tapping into the "more than just a grocery 

store" image to improve sales and profitability, by offering a broader range of products 

with a higher gross profit margin than dry groceries. This is best exemplified through 

the growth in high profit non-grocery goods (ie fresh foods) at MGR stores and the 

strong marketing campaign by Woolworths of “The Fresh Food People”. It is estimated 

that fresh foods now account for between 20-25% of grocery sales. 38 

Home meal solutions 

Australia is seeing a shift to smaller household sizes, increased income levels, longer 

working hours and increased workforce participation, partly demonstrated in Figure 

2.13. 

Figure 2.13: Trend in AWE and the Participation Rate 

AWE Index (Nov 1983 = 100) 

295 

275 

255 

Average Weekly Earnings Participation Rate 

235 

215 

195 

175 

155 

135 

115 

95 

Nov-83 Nov-85 Nov-87 Nov-89 Nov-91 Nov-93 Nov-95 Nov-97 Nov-99 Nov-01 Nov-03 Nov-05 

66 

65 

64 

63 

62 

61 

60 

59 

58 

Participation Rate (%) 

Source: ABS Cat. 6302001 & 6291002 

These trends have all contributed to the growth in frozen or pre-pared meals in the 

grocery retailing market. 

It is estimated by IBISWorld that approximately 60% of sales between 4pm and 7pm 

are via express checkouts and that the frozen meal market has grown in value by 

approximately $100 million over the past 5 years. As a result of this consumer demand 

for pre-made dinners, MGRs are increasingly developing their selection of Home Meal 

Replacement products (eg Meal Solutions) and are relocating frozen food sections to 

the front of the store to allow what is now a $728 billion ‘dinner tonight’ market to make 

purchases instantly. Whilst pre-made meals save time for consumers, they come at a 

greater cost than the sum of the components required for a self prepared meal, 

thereby effectively increasing retailer sales. 

The growth in private labels 

In recent years, as a means to increase margins, contain product range and gain a 

better insight into manufacturing costs, MGRs have begun to attract customers 

introducing ‘housebrand’ products and private labels. 

38 IBISWorld 2007, Report G5111, p. 46. 




MGRs often encourage the third, fourth and fifth-ranked manufacturer to shift to a 

private label arrangement as part of an MGR strategy to narrow product ranges and 

save on the costs associated with stocking too large a range of product lines. 

ABARE suggests that MGRs are likely to gain financially from this introduction, as the 

profits on housebrand products are substantially higher than on national brands. 39 It 

has also been suggested that the MGRs will not be deterred from entering grocery 

categories where national brands are well-established. As a result, the availability of 

shelf-space for national brands and the profitability of the Australian food 

manufacturing business may be affected, as IBISWorld and ABARE estimate that this 

high margin segment is expected to represent approximately 30% of supermarket 

sales. 40 

The growth in private labels is supported by the ACNielsen Grocery Report 2006, 

stating: 

“we are starting to see private label gain share within packaged 

grocery…the tiered private label strategies of Coles and Woolworths are 

beginning to gain traction.” 

Sales of private label packaged grocery goods grew by 7.1% (to $5.8 billion) over the 

year to December 2006, while overall packaged grocery sales grew by 5.8%. Although 

private label products grew at a faster rate than the market overall, the private label 

share of total grocery sales remained essentially unchanged considering that it was 

growing from a much smaller base than the more mature component of the grocery 

market. 41 

Whilst it is evident that early housebrand offers sought to provide basic quality grocery 

items which could be sold at low prices, IBISWorld highlights that industry focus has 

shifted. MGRs are placing major resources behind the development of their own 

private labels which are sustainable, shopper relevant and differentiated from similar 

goods on the market. For example, between 10-15% of Coles’ total product lines are 

private labels, and it is estimated that approximately 95% of ALDI products are 

housebrand products. 

Independent retailers have also developed a housebrand in the form of the “Black & 

Gold” label. Whilst private label products are available at independent grocery stores, 

there has not been a concerted effort to increase sales of housebrand products as a 

proportion of total grocery sales in the way the MGRs have pursued this strategy. 

39 Jacenko, A. & Gunasekera, D. 2005, p. 5. ABARE indicates that gross margins on housebrand products are 2% greater 

than on national brands 

40 Jacenko, A. & Gunasekera, D. 2005, op. cit., p. 5. 

41 ACNielsen Market Information Digest data, quoted in PricewaterhouseCoopers’ 2007 Retail & Consumer Outlook 

Australia – Changes in play, p. 122. 




Increased market segmentation & differences in product range 

The range of merchandise offered by the supermarket and grocery industry is also 

largely segmented into two categories: 

 

 

Discount retailers, such as ALDI, offer consumers a narrower merchandise 

selection of mainly staples to contain costs and present competitive pricing; and 

Larger operators, such as Coles and Woolworths, offer an extensive range of 

branded merchandise along with their own private labels and housebrands. For 

example, ALDI offers a product range of approximately 600 lines, whereas 

Coles offers closer to 30,000 product lines. 

Industry analysis has found operators (ie both MGRs and SMEs) targeting the lower 

end of the market have suffered as a result of the introduction of ALDI into Australia in 

2001. IBISWorld claims that “independent operators are also likely to have been 

adversely affected” from ALDI’s success. 

Petrol provider alliances 

As mentioned previously, the entrance of the MGRs into the fuel market through petrol 

provider alliances has allowed the major retailers to open a large number of 

convenience stores and increase their offering to customers. This has also been an 

attractive growth strategy considering that there are higher margins on grocery goods 

at convenience stores due to the premium for the “convenience factor”. 

In late 2003, research by Roy Morgan indicated that Woolworths experienced a 6% 

increase in the number of customers following its alliance with Caltex. 42 At that time, 

surveys conducted by Roy Morgan found that around 50% of grocery shoppers (or 2.2 

million people) viewed discount petrol as a significant incentive to shop at the 

associated MGR. 43 

Choice of location 

As a general comment, most MGR stores are located in metropolitan and larger 

regional shopping malls, whilst most smaller local shopping centres and strips are 

usually supplied by independent retailers. Based on current store locations, it would 

appear that each retailer generally has a preferred location or strategy, demonstrating 

the segmentation of the grocery retailing market: 

 

 

 

Woolworths and Coles generally prefer large metropolitan shopping malls which 

usually have large parking lots, forming anchor tenants for these malls 

ALDI is generally known for choosing standalone warehouse-style sites on the 

fringe or edge of major malls or suburban areas 

IGA and smaller independent stores generally form part of suburban 

commercial districts such as strip centres or “high street” town centres. 

42 IBISWorld 2007, Report G5111 p. 38. 

43 Ibid. 




These traditional location outcomes are largely a result of the availability of property 

and retail space, the capacity of grocery operators to pay different levels of rent, and 

the preferences of developers. For example, whilst independent retailers view 

becoming an anchor tenant in a large shopping mall as desirable, they are not often 

given access to these prime sites. This appears to be due to the fact that large 

property and shopping mall developers generally prefer the well-known MGRs and 

perceive their having a greater degree of “pulling power” to bring customers towards 

the other speciality shops. 

These traditional locations are likely to change over time. In the quest for earnings 

growth in a mature market, the choice of store location is evolving so that MGRs are 

now seen to be moving into non-traditional store locations using more compact 

formats to open ‘express’ or ‘convenience-style’ outlets, and Supa-IGA stores are 

entering large shopping malls as secondary grocery store tenants. 

Independent retailers seek to provide a service of convenience to a wide range of 

smaller community areas across Australia, especially in remote areas. Their smaller 

size, more community-based retail environments with a more restricted range of 

products comprise the majority of grocery stores and offer a unique customer offering, 

contributing to consumer welfare and choice. 




Box 2: Competition in the grocery retail industry 

The current objectives of competition legislation & its impact on SMEs 

The Australian legislation and legal system has a history of seeking to protect small businesses from 

anti-competitive and “unconscionable” conduct through the Trade Practices Act 1974 (TPA), whilst 

balancing this objective with the aim to promote competition and economic freedom. 

The primary objective of the legislation is “the protection of competition rather than the protection of any 

particular competitors, such as small business”, 44 with the aim to prohibit a dominant market participant 

from taking advantage of its market power to injure or eliminate its competitors. 45 

The Trade Practices Committee of the Law Council of Australia released a submission in March 2007 

which inquired into the effectiveness of the TPA to protect small businesses and discussed potential 

reforms. The submission generally confirmed that the TPA efficiently promotes competition and fair 

trading among all businesses to provide Australian consumers with the benefits of competition, and 

adequately protects small businesses from the misuse of market power. 

Concerns among SMEs regarding the nature and structure of the grocery retail sector 

The economies of scale and bargaining power of MGRs can lead to lower unit costs, which potentially 

benefit consumers through lower grocery prices. However, concerns exist that the oligopolistic nature of 

the sector gives MGRs a substantial degree of financial power to offer some highly competitive prices 

(that can disadvantage SMEs), and to raise the prices of non-core goods. 

For example, a consortium of small business associations in Australia argued in several submissions to 

the Dawson Committee for Trade Practices Review that dominant firms often sell products at very low 

prices with a view to driving out competitors and then charge higher prices later. This would adversely 

affect Australian consumers and is believed to contribute to a significant and measurable increase in 

inflation due to higher grocery prices. 

The issue of market concentration in the retail grocery sector is highly relevant to the operation of the 

TPA, which contains provisions to prevent mergers that substantially undermine effective competition. 

Small businesses argue that the nature of the TPA and its application means that minor or so called 

“creeping acquisitions” by MGRs, (ie purchases of existing independently-owned stores or the opening 

of new stores) are not precluded or actively prevented. This argument is supported by Alan Moss who 

states that where “A large part of the problem is that there is no effective anti-trust/anti-monopoly 

legislation in Australia….the [ACCC] has no power, or policy interest, to prevent a business from simply 

growing enormous and totally dominating the market place.” 46 The Law Council of Australia further 

highlights that regulators have not actively applied the legislation to enhance competition. In its 

submission to the TPA Review Committee in 2002, it stated that “[t]he issue of greatest concern for the 

Council in relation to the merger provisions is the lack of transparency and accountability associated 

with the informal clearance process. In our view, s50…has ceased to be a law by which anti-competitive 

mergers are subject to judicial examination and order”. 47 

Studies by Dr. Kenneth Stone, an economics professor at Iowa State University, support the idea that 

retail sales growth is a “zero-sum game”. That is, gains in sales for MGRs come at the expense of sales 

losses for existing businesses, as grocery sales grow incrementally as population and incomes grow, 

not proportionately. 48 Therefore, the opening of new MGR stores in areas not currently serviced by 

MGRs generally result in creeping market share and monopolisation of local markets (as the MGRs do 

not often compete directly in any one area). NARGA believes that this behaviour is likely to have a longterm 

detrimental impact on market concentration and consumer welfare. 

These concerns and the unique nature of the grocery retailing sector both highlight the importance of 

ensuring that the application of competition legislation is appropriate to the needs of particular 

competition environments. Doing so will enhance consumer welfare and choice, contain food price 

inflation, and ensure that effective competition is encouraged in the grocery retailing sector. 

44 Submission by the Trade Practices Committee of the Business Law Section of the Law Council of Australia to the Senate 

Economics References Committee, 2007, “Inquiry into the effectiveness of the Trade Practices Act 1974 in protecting small 

business”, 12 March 2007, p 8 (s2.2). 

45 Ibid. 

46 Moss, A. 2007, Report of the 2006/07 Review of the Shop Trading Hours Act 1977, February 2007, p. 27. 




2.1 National economic impacts 

The total economic impact of independent retailers can be identified through the 

analysis of the direct effect of the initial increase in revenues or demand and the 

indirect (or “flow-on”) effects. The flow-on effects result from the linkages between 

industries in the economy. 

 

 

Direct impacts are the revenues generated as a result of the operations proper, 

which are subsequently distributed (eg as wages payments to supermarket 

employees) 

Indirect impacts refer to the additional flow-on employment, income, imports, 

output or revenues generated by a particular industry and its distributions (eg 

indirect effects take into account the economic effects of expenditure by 

supermarket employees on additional local services, and local spending by 

accountants as a result of receiving fees from local grocery retailers for their 

services) 

The diagram below provides an indication of the manner in which the direct and 

indirect effects of grocery SME activity demonstrates their economic impact at an 

aggregate level. Figure 2.14 also highlights that the economic impacts of SMEs tend 

to be stronger at a local and State level and thereby more geographically contained 

than those of MGRs. This is relevant to their impact on the WA economy which will be 

discussed in Section 5.3 of this report. 

Figure 2.14: Measuring aggregate economic impacts of SMEs 

By identifying suppliers to the retail trade industry, it is possible also to understand the 

broad impact of retail trade on other industries. In 1996/97, the retail trade sector 

procured supplies from 90 industries (of a total of 106 at the time as defined by the 

ABS) valued at over $23.3 billion. 49 

47 Submission by the Business Law Committee of the Law Council of Australia to the Trade Practices Act Review 

Committee, 2002, “Review of the Competition Provisions of the Trade Practices Act 1974”, June 2007, p 54 (s5.1). 

48 Mitchell, S. 2003, op. cit., p. 5. 

49 ABS, Cat. 52090, Table 2. 




The sectors which received over $500 million input from the retail trade sector in 

1996/97 were as follows (in order of importance): 

 

 

 

 

 

 

 

 

 

 

 

Legal, accounting etc services 

Communication services 

Property services 

Other business services 

Printing; services to printing 

Other repairs 

Publishing, recorded media etc 

Meat and meat products 

Banking 

Wholesale trade 

Motion picture, radio etc services. 

Other important industries which benefit from the grocery retail industry in particular 

were mentioned earlier and include: 

 

 

 

 

 

Fresh fruit and vegetable 

production 

Food and beverage manufacturing 

Commercial refrigeration 

Refrigerated road transport 

Refrigerated storage service. 

The intra-industry flows between retail trade and this diverse range of sectors 

emphasises the important flow-on effects of the retail trade industry, which acts as a 

proxy for understanding the effect of the grocery industry. A full list of intra-industry 

flows and their supply contribution to the retail trade sector is provided in the Appendix 

A. 

In relation to the grocery industry, it is believed that SMEs generate significant 

economic benefits due to their large volume and their disproportionately high 

employment contribution as compared to their market share (ie grocery SMEs employ 

57% of total grocery industry employees nationwide, although they hold only 20% 

market share). 

At a nationwide level, the collective direct and indirect impacts of a dollar spent in 

grocery SMEs as a group are likely to be similar to those generated by a dollar spent 

at an MGR. However, of particular interest is the fact that independent grocery 

retailers promote the localised accumulation of wealth more strongly by sourcing a 

larger proportion of their inputs on a local basis, in particular service inputs such as 

accounting, legal and local media services. Once again, this is of particular interest to 

the benefits that the WA economy gains from independent retailers which are 

discussed in Section 5.3. 



3 National economic impact of SMEs and 

grocery SMEs 

Independent grocery stores are the product of investment by small 

entrepreneurs and contribute greatly to the economic prosperity of local 

communities. These grocery stores are often the anchor or hub of suburban 

centres, drawing customers to shopping areas and sustaining community life. 

Small entrepreneurs and medium-sized businesses in the economy have consistently 

contributed towards building wealth in the Australian economy and were recently 

commended by the Federal Treasurer, Peter Costello, in his 2007 Budget Speech. It 

is estimated that the total wealth of family-owned businesses in 2006 was A$4.3 

trillion. A similar study undertaken in 2003 indicated total wealth was close to $3.6 

trillion, indicating a compound annual growth rate of 6.1%. 50 

To provide some context for these values, family-owned businesses represent a 

greater value than total managed funds and ASX market capitalisation combined; the 

ASX as at January 2007 had a total domestic equity market capitalisation of $1.42 

trillion, whilst total FUM 51 in the managed funds industry stood at $1.3 trillion as at 

June 2006. 52 

In addition, family involvement in small businesses and entrepreneurship is extensive. 

For example, microbusinesses (those businesses employing fewer than five people) 

accounted for 85% of the total number of small businesses in 1994/95, and only 6% of 

employing businesses with fewer than five people employed did not involve 

proprietors from the same family. Among small businesses with between 5 to 19 

workers, still approximately 83% of the businesses involved family ownership. 53 

The results of the Family and Private Business Survey 2006 undertaken by RMIT 

University for the accounting group MGI further found that: 

 

 

 

 

 

family enterprises generate more than half of Australia’s employment growth 

family enterprises account for approximately 40% of Australia’s private sector 

output 

approximately half of Australia’s top 500 private companies are family owned 

approximately half the family business owners see themselves working in the 

business beyond age 65 years 

approximately half the family business owners indicate that their retirement 

programs rely on superannuation. 

These statistics give an indication of the positive economic benefits that family-owned 

enterprises contribute to the Australian economy, both in terms of employment and 

output, as well as from the perspective of the promotion of diligent work ethic and 

generation of wealth. 

This is not to say that all grocery SMEs are family-owned enterprises. However, all 

grocery SMEs are independently owned, and a significant proportion of SMEs are 

family businesses and provide similar economic benefits to the national economy. 

50 MGI Australasia Media Release, 16 November 2006 End of Dynasty for Family Businesses? - Survey, p. 1. MGI’s Family 

and Private Business Survey 2006 was undertaken by RMIT University for the accounting group MGI. 

51 Refer to funds under management. 

52 ABS Cat. 5655.0, Managed Funds, Australia. 

53 ABS Cat. 4102.0, Australian Social Trends, 1997. 



National economic impact of SMEs and grocery SMEs 


3.1.1 Retail Turnover & Industry Value-Added 

It is estimated that independent grocery operators will have accounted for 

approximately $15 billion in sales in the year to January 2007 54 , with consumer 

spending at independent grocery retailers constituting around one in every five 

supermarket dollars, or 20% of the retail grocery market. 

The exposure of independent retailers in the grocery retail market has also been 

increasing. According to ACNielsen, total banner group market share increased from 

18.5% as at 30 April 2006 to 18.9% at the end of October, 55 reflecting some gains 

from the MGRs at a national level. The Australian Financial Review highlighted this 

growing awareness of independent retailers, quoting Citigroup estimates which 

suggested that IGA has collected 42% of foregone sales from the Coles Group due to 

the conversion of the Bi-Lo supermarket chain. 56 

Figure 3.1 below shows the distribution of IVA in the retail trade sector as published in 

2004/05 by the ABS. 

Figure 3.1: Industry Value-Added by business size in the retail sector, 2004/05 

6% 

35% 

38% 

21% 

Small businesses (employing) 

Large businesses 

Medium businesses 

Non-employing businesses 

Source: ABS, Cat. 81550 Australian Industry 2001-02 to 2004-05 

54 Assuming that independent retailers account for between 19-21% of supermarket and grocery sales (depending on 

whether $68 billion or $74 billion in total sales are assumed as mentioned previously). 

55 Metcash Broker Reports. 

56 Evans, S. 2007, “Bi-Lo failure costs $350m”, The Australian Financial Review, 17 April 2007, p. 14. 




This demonstrates that the majority of IVA in the retail sector was contributed by 

SMEs. In particular, employing SMEs consisted of approximately 56% of the total IVA. 

Through their capacity to tailor their offering to local needs and demographics, and 

their attempt to customise their product range and store layout to the preferences of 

local shoppers, independent retailers are able to add value to their sales offering. The 

convenient “high street” location of grocery SMEs also contributes to their attraction to 

shoppers. 

Box 3: The IGA Network 

The Independent Grocers of Australia (IGA) is the largest independent retailer network which includes 

Ritchies IGA and FoodWorks. There are several other banner groups in the industry. These banner 

groups constitute between 85-95% of all independent retail sales on a nationwide basis. 

IGA was brought to Australia from the United States by Davids Holdings in 1988 when 10 stores initially 

became members of IGA. Independent retailers are increasingly aware of the benefits of uniting under a 

single banner. As a result, there are currently 1,209 IGA stores in the country. Davids has changed its 

name to Metcash and the distribution side of the business changed to IGA-Distribution (IGA>D). 

The stores supplied by IGA>D are grouped into three channels depending on their size, range and 

customer profile. 

Channel 1: Supa IGA 

Large format stores, carrying a full and large supermarket range. These stores primarily cater to 

shoppers who wish to purchase all of the grocery and fresh food requirements in one location. 

Channel 2: IGA 

Medium format stores that carry a mid-sized supermarket range. These stores are neighbourhood 

stores catering to shoppers who purchase less items, but do so more regularly. 

Channel 3: IGA X-press 

Small format stores which attract a convenience market with a concentration on high service. These 

stores supplement a full grocery shop and specifically target the shopping demographic in their area. 

By being part of the IGA banner, the independent stores are able to buy groceries at more competitive 

prices. Storeowners also receive marketing and business programmes and guidance, fresh food 

specialist advice and IT support. 

The Black & Gold brand was also launched in 1980 to compete in the housebrand market and now 

offers a wide range of products through independently owned supermarkets. 

IGA provides a support system that strengthens independent supermarket operators and aims to 

provide customers with a cost-effective shopping alternative. In addition, IGA, and other similarly 

independent grocers, generally aim to achieve a “competitive edge” by investing more in their individual 

businesses to increase local market share and by positioning themselves as a leader in community 

support. 

Source: IBISWorld, IGA website 




3.1.2 Retailer Numbers & Growth 

The ABS estimates that 1.12 million non-agricultural private sector small businesses 

operated in Australia during 2000/01, which represented 96% of all non-agricultural 

private sector businesses. 57 Similarly in 1999/2000, small enterprises in the retail trade 

sector (including non-employing) represented 96.8% of total retail trade businesses in 

Australia. 58 These figures demonstrate the strong economic contribution of small 

businesses in Australia. 

Nationwide, approximately 4,500 independent grocery retailing stores operate and 

comprise 73% of all supermarket and grocery stores (as shown earlier in Figure 2.6). 

Over 1,209 stores were operating under the IGA banner, the largest independent 

retailing banner group, as of mid-2006. 59 Over 39,000 square metres of selling space 

were added to the IGA brand by the opening of 44 new stores in 2005/06. More than 

48 major refurbishments were completed during the year and the completion of 76 

new independent stores is believed to be undergoing consideration for the end of 

financial year 2007. 60 FoodWorks, the other large independent banner group and 

Metcash’s largest client also rebranded 350 stores in financial year 2006. During the 

next 12 months, it is estimated by Metcash that 37 new FoodWorks stores will be 

opened and 44 stores refurbished and expanded. 

According to Metcash, sales increased by 6.3% for comparable IGA stores, and by 

6.0% for comparable Foodworks stores in financial year 2006. 61 This compares 

favourably with Australian retail sales growth of 4.3%. 62 Coles experienced 1.7% store 

growth and Woolworths closer to 4.5% growth in supermarket stores over the same 

period. 63 Metcash, the major supplier for these SMEs highlighted in their most recent 

Annual Report that this strong growth in independent retailers was underpinned by a 

strong eastern seaboard television campaign and local store area marketing. 

57 Private sector businesses account for 99.6% of the total number of businesses in Australia and employed an estimated 

7.3 million people or 85% of the total workforce in 2001. Non-agricultural private sector businesses represent 91% of the 

total private sector business and employed 95% of the total private sector workforce. ABS Cat. 1321.0, Small Business in 

Australia, 2001. 

58 ABS, Small Businesses 2000. 




62 ABS, Cat. 850104. 

63 Coles and Woolworths Annual Reports 2006, 2005. 





It is estimated by the ABS that non-agricultural small businesses employed almost 3.3 

million people in 2000/01, which represents 47% of total non-agricultural private sector 

employment. 64 Once again, this demonstrates the strong economic contribution of 

small businesses to the Australian economy. 

ABS estimates suggest that the contribution of grocery SMEs is approximately 

226,400 employees (including part-time and casual employees) and 144,267 FTEs, 65 

or close to 57% of total supermarket and grocery employment. 

Box 4: Contribution to retail trade by business size 

The graph below shows the proportion of employment, total wages paid, sales generated, etc. in the retail 

trade sector according to business size. The percentages in bold indicate the percentage contribution of 

SMEs (excluding non-employing business) to each variable of interest. 

Percentage of total operating contributions by business size in retail trade, 2004/05 

100% 

90% 

80% 

70% 

60% 

50% 

40% 

30% 

61% 

20% 

48% 

55% 

45% 

10% 

0% 

Employment Wages and salaries Sales income Profit before tax IVA 

56% 

Small businesses (employing) Medium businesses Non-employing businesses Large businesses 


Large businesses (ie MGRs) account for a sizable contribution to the retail industry, however, cumulatively, 

SMEs account for a proportionately greater value given their lower market share. 

Employing SMEs contribute a greater proportion of wages and salaries and Industry Value-Added (IVA) than 

the level of employment or profits they generate. This is indicative of the important role that SMEs play in 

promoting wealth redistribution and local economic prosperity through recirculation of a larger proportion of 

sales income at a local level. 

This graph also provides a number of insights into the contribution of SMEs (excluding non-employing 

businesses): 

 

 

 

SMEs employ approximately 48% of all employees and pay approximately 61% of all wages and 

salaries paid in the retail trade sector, whilst large businesses employ approximately 43% of all 

employees and pay an even smaller proportion, 38%, of all wages and salaries paid in the retail trade 

sector 

SMEs generate 45% of retail trade sector profits before tax, only slightly larger than the proportion of 

sector profits generated by large businesses (39%). This highlights that a greater proportion of sales 

generated each period are distributed by SMEs in the form of wages, salaries and to local serviceproviders 

(eg accountants, lawyers, printers, local papers, etc) than by large businesses. However, 

large businesses distribute higher profits to shareholders than SMEs deliver to owners for reinvestment 

SMEs generate 55% of sales and 56% of the IVA of the retail trade industry – greater proportions than 

their employment contribution 

64 ABS Cat. 1321.0, Small Business in Australia, 2001. 

65 According to ABS Cat. 81550 in 2004-05 approximately 57% of all employment in the retail trade sector was through 

small and medium-sized businesses (including non-employing businesses). Hence, 57% of total supermarket and grocery 

employees (397,198 as mentioned previously) constitutes approximately 226,400 employees. Even where non-employing 

businesses (9% of employees) are excluded, small and medium-sized businesses still employ approximately 48% of 

employees. 



4 Grocery retailing in Western Australia 

Retailing plays an important role in the Western Australian economy, 

accounting for around 20% of WA’s GSP and supermarket and grocery trade 

accounting for 74% of food retailing. Retailing has gained from WA’s strong 

economic growth, significantly outperforming national retail performance. 

WA has exhibited strong economic performance in recent years, with the state’s 

domestic economy expanding at an eight-year high of 10.4% in 2005/06. As a result, 

obtaining a greater understanding of the contribution of SMEs to this rapid growth is of 

particular national interest. WA has had by far the highest rate of growth of all the 

Australian states and territories with business investment activity growing by almost 

40% during 2005/06 and with domestic growth more than 2½ times the rate of growth 

recorded nationally. 

Despite a slower growth trajectory in the domestic economy predicted for the coming 

years, the Chamber of Commerce and Industry of WA expects the WA economy to 

grow by 6.5% in 2006/07 and a further 4.75% in 2007/08. This bullish outlook is 

underpinned by an anticipated strengthening in export volumes. 

WA’s Gross State Product (GSP) reached approximately $108 billion as of June 2006. 

This constitutes approximately 12% of Australia’s GDP which is slightly greater than 

WA’s 10% share of the Australian population. 

The retail market has experienced very strong positive momentum from this economic 

strength. Figure 4.1 demonstrates that the WA retail market has significantly 

outperformed the national retail market since 2004. When compared over a ten-year 

period, the WA retail market also outperforms the national market. Figure 4.1 also 

highlights that retail trade in WA has consistently grown as a proportion of nationwide 

retail trade, growing from approximately 9.8% at the end of 2003, to approximately 

10.9% as at January 2007. 

Figure 4.1: Retail turnover nationwide and in Western Australia 

WA as % of National Retail Trade 

11.0% 

10.5% 

10.0% 

WA Retail as a % of National Retail WA Retail Turnover National Retail Turnover 

128 

123 

118 

113 

108 

103 

9.5% 

98 


Index (Jan 2004 = 100) 


Figure 4.2 demonstrates that food retailing has grown consistently in line with retail 

trade, despite expectations that grocery good retailing, which represents the provision 

of basic staples, is not as exposed to the upside of economic turnover. This disputes 

the theory that food falls as a proportion of expenditure as income rises, and may 

suggest that people are increasingly buying more expensive food and grocery goods. 



Grocery retailing in Western Australia 

Figure 4.2: Food retailing compared with total retail turnover in WA 

200 

Total Retail Turnover Food Retailing Perth AWE Perth CPI 

WA Retail Turnover Index (Jan 1997 = 

100) 

180 

160 

140 

120 

100 

80 

Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 

Source: ABS Cat. 8501010, 63020012e & 640109 


4.1.1 Retail Turnover 

Retail trade in WA constituted approximately 11% of total retail turnover in Australia 

(as at January 2007), 66 approximately equal to their contribution to the Australian 

population (10%). 67 

Total retail turnover represented approximately 20% of WA’s GSP in financial year 

2006, approximately equal to the 23% that retail trade represents at a nationwide 

level. 68 

Food retailing represents 41% of total retail trade, which is approximately equivalent to 

the national average. However, supermarket and grocery trade accounts for 

approximately 74% of total food retailing, a greater proportion than the national 

average of 71%. 69 Consequently, supermarket and grocery retailing for the year to 

January 2007 accounted for approximately $6.98 billion in turnover. 70 

66 ABS, Cat. 850104. 

67 Ibid, ABS Cat. 31014. 

68 ABS, Cat. 850104. 

69 ABS, CPI 15 th Series Weighting Pattern 6430.0. Australian average based on all eight capital cities, WA based on Perth 

CPI weighting. 

70 ABS, Cat. 850104. Calculated as total retail sales multiplied by 41% (food retailing proportion), then multiplied by 74% 

(supermarket and grocery proportion). These estimates have been sourced in previous footnotes. This value could be as 

large as $8.14 billion (were it to be calculated on the basis of 11% of $74 billion, not the reported ABS figure of $63 billion) 




4.1.2 Retailer Numbers 

In WA, approximately 94.7% of all retail trade businesses were classified as small 

enterprises in 1999/2000. 71 Whilst this value is lower than the national average of 

96.8%, the high representation of SMEs in terms of store numbers is reflected in 

independent retailers holding a higher market share in WA than any other Australian 

State or Territory. SMEs have approximately 32% of market share in WA. 72 

According to IBISWorld, approximately 8% of all retail grocery stores are located in 

WA, or the equivalent of approximately 494 stores. 73 According to Metcash in WA, 

SMEs constitute around 400 of these stores, thereby accounting for approximately 

81% of grocery stores in WA, a significantly higher proportion than the national 

average of 73%. The proportion of total store numbers represented by SMEs is seen 

in Figure 4.3. 

Figure 4.3: SMEs as a proportion of total retailer numbers in Australia and WA 

Australia 


6,183 grocery stores 494 grocery stores 

27% 

19% 

73% 

81% 

SMEs 


MGRs 

SMEs 


MGRs 

71 ABS, Small Businesses 2000. 

72 AC Nielson Grocery Report 2006, p.12. 

73 Based on the assumption of 4,500 independent grocery retailing stores established by NARGA and 1,683 MGR stores 

(as calculated from IBISWorld Reports, Coles Annual Report and Woolworths Annual Report). 





According to ABS statistics, a total of 156,733 employees are employed in the retail 

trade industry in WA, representing approximately 10% of total retail trade employment 

across Australia. 74 

Of this value, approximately 43,885 employees and 33,310 FTEs 75 are employed in 

the supermarket and grocery retailing industry in WA. 76 The supermarket and grocery 

industry employs approximately 28% of total retail employees in WA, a greater 

proportion than the national average of approximately 26.5%. 

The breakdown of the total grocery employment figure in WA in terms of full-time and 

part-time employees is shown below in Figure 4.4. WA employs 52% of employees on 

a full-time basis, which is higher than the national average where approximately 41% 

of employees in the retail trade industry are employed on a full-time basis. 

Figure 4.4: Breakdown of supermarket and grocery retail employment in Australia and WA 

Australia 


234,823 

people 

162,376 

people 

41% 

21,150 , 

48% 

21,150 

people 

48% 

22,735 

people 

52% 

59% 

Full-time employees , 0% 

Part-time employees 

Full-time employees 

Source: ABS Cat. 6291005 & 81550 

Part-time employees 

74 ABS, Cat. 6291005. 

75 According to ABS estimation techniques, FTEs are calculated as full-time employees plus 50% of part-time employees. 

76 According to ABS Cat. 81550, “Food Retailing” represented approximately 40% of “Retail Trade” employment. Assuming 

that 70% of food retailing employment is within the supermarket and grocery industry (according to retail turnover), this 

estimate highlights that supermarket and grocery retailing constitutes 28% of total retail trade employment. 




Box 5: The deregulation debate for trading hours 

Although deregulation of trading hours in WA was rejected in a referendum 2005, debate continues 

over the merits of deregulation to align the retail industry in WA with most other Australian states. 

Small businesses assert that the lengthening of operating hours will simply serve to extend the lead in 

market share of the major retailers, despite the fact the deregulation would almost certainly offer 

benefits to consumers who prefer flexibility in their shopping hours. 

The Report of the 2006/07 Review of Shop Trading Hours Act 1977 conducted by Alan Moss 

specifically stated that “every time shopping hours are extended the big retailers inevitably increase 

their sales. The overall market is not expanding rapidly enough to absorb this and hence the big 

retailers increase their market share at the expense of the smaller ones.” 77 Whilst a decline in small 

business is a transfer of wealth rather than a specific economic cost, the reduction in the variety of 

products and types of retailers could potentially reduce consumer and social welfare. 

IBISWorld supports this, indicating that increased trading hours are generally to the detriment of 

smaller industry operators who lack the staff and resources to operate extended hours. It appears that 

culturally, shopping out of normal operating hours is more likely to be in a shopping mall rather than a 

suburban strip centre. 

A study conducted by the South Australian Centre for Economic Studies in September 2006, which 

investigated the Potential Economic Impact of Liberalisation of Shop Trading Hours, concluded that 

“based on the experience of previous extensions of shopping hours, there is no evidence to suggest 

that further liberalisation would increase either state income or employment levels, but nor is there any 

evidence it would have a negative effect on the number of small retail business (in aggregate)”. 78 

The study found that ABS data on retail turnover showed no evidence of a benefit or increase in retail 

turnover and employment as a result the reforms. The study went on to argue that the lack of 

acceleration in retail sales growth suggested the only change had been in the timing of retail sales. 79 

The graph below, sourced from ABS data, demonstrates that despite regulated retail trading hours, 

retail turnover in Western Australia has been stronger than the national average and stronger than 

South Australia, despite SA having liberalised trading hours in 2003. 

Total Seasonally-adjusted Retail Turnover by State 

Index (Jan 2004 = 100) 

130 

125 

WA Retail Turnover National Retail Turnover SA Retail Turnover 

120 

115 

110 

105 

100 

95 


Source: ABS, Cat. 850104 

However, the study did suggest that consumers would benefit from greater flexibility and would obtain 

value from being able to shop outside of existing operating hours. The increase in shop trading hours 

provides consumers with greater choice in the timing of their shopping and is another form of 

competition between industry players. 

The outcomes of these studies suggest that retail hours are not a significant constraint to total sales, 

but rather change the timing and distribution of retail sales. 

77 Moss, A. 2007, Report of the 2006/07 Review of the Shop Trading Hours Act 1977, February 2007, p. 29. 

78 O’Neil, M., Kosturjak, A. & Whetton, S. (The SA Centre for Economic Studies), 2006, Potential Economic Impact of 

Liberalisation of Shop Trading Hours, September 2006, p. (ii). 

79 O’Neil, M., Kosturjak, A. & Whetton, S. (The SA Centre for Economic Studies), 2006, op. cit., p. 2. 



5 Economic contribution of SMEs in WA 

Independent retailers play a vital role in the WA grocery retailing industry, 

accounting for a greater proportion of turnover and stores than in any other 

Australian State or Territory. Independent grocery retailers are also increasingly 

generating significant social and environmental benefits for local communities 

and states as a whole. 

The business value of grocery SMEs in WA is estimated to be approximately equal to 

$646 million (as shown below in Figure 5.1). This value highlights the significant 

amount of wealth invested in the WA economy (and local economies within the State) 

by local independent grocery retailers and entrepreneurs in the industry. 

Figure 5.1: Estimation of business value of SMEs in WA 

(A$ million) 

Metcash Turnover (WA) 80 , $ 1,200 

Retail Sales (1.75x Turnover) Error! Bookmark not defined. 2,100 

EBITDA Margin (5%) 81 105 

Business Value 5x EBITDA + 3x Ave Weekly Sales (inventory) 82 $ 646 

Source: NARGA, Metcash, Woolworths & Coles Annual Reports 2006 

Comparative business value figures can provide an indication of the growth in wealth 

that is reinvested in communities on a per business basis. For example, the business 

value of SMEs in WA suggests that each independent retailer has an average value 

approximately equal to $1.615 million and will reinvest most earnings in the local 

community. 83 MGRs are comparatively less likely to be reinvest earnings at a local 

community level and they typically distribute over 60% of earnings as dividends to 

institutional and retail shareholders who are largely on the eastern seaboard of 

Australia. 


5.1.1 Retail Turnover 

Retail grocery sales among independent retailers in WA are estimated to be close to 

$2.1 billion per annum, 84 all of which are supplied by Metcash who has grocery-related 

sales in WA of approximately $1.2 billion per annum. 85 

The ACNielsen Grocery Report 2006 illustrates that WA, of all the Australian States 

and Territories, has the highest proportion of each supermarket dollar spent at 

independent retailers. For example, independent retailers as at September 2006 had 

31.9% market share of packaged grocery trade in WA, compared with market share 

80 Metcash turnover sourced from Metcash Market Briefing, 6 March 2006. 

81 EBITDA Margin (5%) constitutes a value approximately mid-way between the Metcash EBITDA Margin (3.5%) and 

Woolworths EBITDA Margin (6.5%). 

82 EBITDA Multiple (5x) considered to be fair value. 

83 Based on the assumption of 400 independent grocery stores existing in WA. 

84 Assuming a 75% mark-up. This is also consistent with estimates calculated based on the market share that independent 

retailers hold in WA. That is, approximately 32% of total supermarket sales in 2005/06 of $6.565 billion dollars, according to 

ABS Cat. 850104, equates to approximately $2.1 billion in sales. 

85 Metcash, “FAL+100 Days” Market Briefing, 6 March 2006, see slide 14. 



Economic contribution of SMEs in WA 

closer to 20% at a national level. 86 Although these figures do not include housebrand 

spending, they demonstrate that SMEs play a greater role in grocery retail trade in WA 

than elsewhere nationally. 

However, it is estimated by NARGA that the market share of SMEs in WA was as high 

as 56% two decades ago. ACNielsen data supports the notion that the market share 

of independent retailers is shrinking in WA as well, indicating that the market share of 

SMEs in WA may have been closer to 40% even just 15 years ago. 87 

5.1.2 Retailer Numbers & Geographic Distribution 

Independent retailers are strongly represented in WA. Rates of growth in WA 

businesses in general, as well as specifically in small businesses in the retail industry, 

have consistently been higher than national averages, as shown in Figure 5.2. 

Figure 5.2: Comparison of growth rates of the number of businesses in total and in retail trade in 


Growth rates from 1983-84 to 1999-00 Australia WA 

Growth in total business enterprises 3.5% 4.6% 

Growth in total small business enterprises 3.5% 4.6% 

Growth in retail business enterprises 0.7% 1.5% 

Growth in retail small business enterprises 0.6% 1.3% 

Source: ABS, Small Business 2000 

It is estimated that around 72% of WA’s population is resident in its capital city, 

Perth. 88 Whilst this level of concentration is similar to Victoria and South Australia, it is 

significantly higher than the national average. The national average indicates that 

approximately 63% of the Australian population lives in capital cities. 89 

WA is host to approximately 206 IGAs and 194 other independent retailers, all of 

which are supplied by Metcash. Although it is believed that other SMEs do operate in 

WA, their small size and geographic isolation would indicate that they do not constitute 

any material proportion of the total independent retailer numbers and are likely to be 

supplied by other larger IGA stores. 

These 400 independent grocers service both metropolitan areas as well as the 

geographically harder territory in WA with thinner populations. Hence, SMEs are 

distributed across the state to a greater extent than the MGRs and provide rural and 

regional inhabitants with access to basic grocery needs. 


87 Ibid. 

88 2001 Census QuickStats. 

89 ABS Cat. 31014 and 2001 Census QuickStats. The national average was calculated on a weighted average basis (ie 

weighted according to population). 




Box 6: Small helping small 

Smaller local producers and manufacturers struggle to match MGR purchasing power 

MGRs generally engage in centralised buying to effectively utilise their purchasing power and achieve 

economies of scale. However, this centralised procurement technique and the fact that MGRs have strong 

purchasing power and require larger quantities to be supplied is viewed as a threat to local primary producers, 

manufacturers and suppliers in WA. Hence, where smaller growers are unable to service the large volumes 

demanded, they risk financial difficulties through being excluded from the supply-chain of the MGRs who often 

require significant ranging fees and present barriers to entry for small producers and manufacturers. 

In addition, with the rise in private labels many smaller producers are being contracted to supply for housebrand 

products, which further reduces their margins. For example, a report produced by the Economics and Industry 

Standing Committee in 2003, entitled The Sustainability of the Dairy Industry in Western Australia, stated that the 

“national tendering process for generic milk contracts initiated by Woolworths in 2000 continues to reduce the 

profitability of milk processors and dairy farmers throughout Australia”. 90 

Establishment of alliances between small local growers and SMEs to sustain local industries 

There is the potential for local growers and manfuacturers to ensure their continuing survival and growth by 

marketing to independent retailers and establishing alliances to provide smaller volumes to SMEs. It was 

highlighted in the 2003 report that “[t]he Western Australian industry must retain a critical mass of efficient dairy 

famers so that its small production base is not further diminished”. 91 

Therefore, independent retailers need to be able and willing to work with primary producers and intermediaries to 

support local WA growers and farmers. This is especially relevant to those operating in struggling industries such 

as the dairy industry, where farm numbers have almost halved since 2000, WA is experiencing severe milk 

shortages and WA farmers are the nation’s lowest paid dairy producers. 92 

The flexibility that independent retailers can offer their suppliers by 

not requiring ranging allowances or promotional discounts has 

allowed SMEs to sustain and strengthen primary producing 

industries in WA. For example, in 1998 the banana industry in WA 

was in decline with annual sales of approximately $2-3 million, with 

many plantations being removed and replaced by grapes. The 

Sweeter Banana Co. in WA at the time was not supported by any 

of the MGRs in WA and began promotiong the traditionally smaller 

“lunchbox banana” through independent rtailers. 

Today, new plantations are being planted due in no small part to the success of the alliance with independent 

retailers and the Sweeter Banana Co. has around $16 million in sales per annum, of which over 90% of sales are 

through IGA business. 

Similarly, WA cirtus was experiencing steady sales decline during a similar period with the industry suffering as 

the MGRs would not support local producers with buying programs established in the east and Riverland in SA 

to supply WA. To counteract this trend the “Blue Sticker” campaign was launched to identify and promote WA 

citrus through independent retailers. The “Buy WA” citrus campaign resulted in the resurgence of demand for 

local citrus and lead to the development of the Sandgroper Brand for the marketing of WA citrus. In 1998, total 

sales of citrus excluding export were approximately $4 million. Today, sales exceed $8.5 million with the over 

80% of business through independent supermarkets. 

In future, SMEs may play an even greater role in contributing to the viability of many smaller primary producers. 

SMEs generally require smaller quantities and whilst their bargaining power is gaining strength through banner 

groups and their alliance with Metcash, they have the opportunity to procure their products independently of 

Metcash. This arrangement increases the potential for the benefits of increasing retail prices to be shared by 

retailers and producers. 

90 Economics and Industry Standing Committee (2003), “The Sustainability of the Dairy Industry in Western Australia”, 

Report No. 8 in the Thirty-Sixth Parliament, 4 December 2003, p. xxv. 

91 Ibid. 

92 Thomson, J. 2007, “Milk price ‘must rise’ to save State’s farmers”, The West Australian, 2 March 2007. 





According to statistics from Small Businesses 2000 produced by the ABS, 

employment growth among small businesses has generally been stronger than the 

average for all businesses. Employment growth in WA businesses has been 

consistently stronger than with national businesses, as seen in Figure 5.3. Although 

these figures are historical, the figures for WA are likely to be conservative in light of 

recent economic strength. 

Figure 5.3: Comparison of growth rates of the number of employees in total and in retail trade in 


Growth rates from 1983-84 to 1999-00 Australia WA 

Employment growth in all businesses 2.8% 3.8% 

Employment growth in small businesses 3.1% 4.3% 

Employment growth in retail businesses NA 3.8% 

Employment growth in retail small businesses 1.0% 2.8% 

Source: ABS, Small Business 2000 

SMEs employ an estimated 23,859 employees and 18,133 FTEs in WA, or 

approximately 54% of total grocery employment in WA, a slightly lower figure than the 

national average of 57%. 93 

Figure 5.4: Employment contribution by business size 

Australia (retail trade) 


9% 

SME equivalents 

31% 

20,026 

people 

16,940 

people 

39% 

43% 

17% 

MGR equivalent 

45% 

6,919 

people 

16% 

Small businesses (employing) 

Medium businesses 

Small enterprises 

Large enterprises 

Medium enterprises 

Large businesses 

Non-employing businesses 

Source: ABS, Cat. 81550 & Small Businesses 2000 

Independent retailers have significantly higher labour intensity than the average levels 

in WA, and Australia in general. This is represented in Figure 5.5 on the following 

page. 

93 ABS Cat. 81550 provides a breakdown of the proportion of employees employed in different sized enterprises (small, 

medium and large) in the retail trade industry. The above figures have been derived by extrapolating the size of small 

business employment in the WA grocery retail industry made from the ABS publication of Small Businesses 2000 and 

combining these estimates with the proportions of employment provided in Cat. 81550 regarding the split between small 

and medium-sized businesses. These estimates were then compared with the WA employment figure of 43,885 FTEs 

derived from ABS Cat 6291005 and 81550, which matches closely with calculations derived from the Small Businesses 

2000 report. 




Figure 5.5: Comparison of labour intensity in the grocery retail sector, 2005/06 

70 

60 

50 

40 

SMEs in WA 

WA 

SMEs in Australia 

Australia 

30 

20 

10 

0 

FTEs per $1 million sales 

FTEs per store 

SMEs play a greater role in generating employment per $1 sales. Calculations based 

on sales from 2005/06 suggest that SMEs in WA contribute almost 9 FTEs per $1 

million in grocery sales, which is slightly lower than the Australian average of just over 

10 FTEs per $1 million. However, SMEs in WA compare favourably with national 

figures – WA has employs around 5 FTEs per $1 million sales, and the national 

average is closer to around 4 FTEs per $1 million in sales. WA’s labour intensity is 

greater than the national average when FTEs per store are compared. 

5.2 Recent Trends 

5.2.1 Food price inflation 

Analysis of inflation statistics demonstrates that over a 10 year period, Sydney and 

Melbourne have had almost identical rises in food prices, whereas Perth has had a 

slightly lower rise in food prices (see Figure 5.6). Whilst there was close correlation 

beween food price inflation in Perth and Sydney up until June 2005, since this date 

Sydney food price inflation has risen to be 3% greater than that in Perth. This is an 

interesting result given the remoteness of Perth, as a significant proportion of 

groceries originate from eastern states, which adds to transport costs with this period 

also seeing transport costs rise significantly due to higher fuel prices. These 

circumstances suggest that it could have been expected for Perth to have higher food 

price inflation than at a national level. NARGA attributes the lower prices in Perth to 

be substantially a result of the higher market share of the independent grocery sector. 

A longer time period will be required to confirm this view. 

Figure 5.6: Comparison of food price inflation in Sydney and Perth 

145 

140 

135 

130 

125 

120 

115 

110 

105 

Food Inflation - Sydney 

"Food Inflation - Perth" 

100 

Mar-97 Dec-97 Sep-98 Jun-99 Mar-00 Dec-00 Sep-01 Jun-02 Mar-03 Dec-03 Sep-04 Jun-05 Mar-06 Dec-06 





The difference in food price inflation between the two cities may also be related to the 

nature of CPI food weightings. The food category “meals out and takeaway foods” has 

a consistently higher weighting for Sydney than for Perth. This category generally 

plays a larger contributory role in driving food price inflation growth than any other 

food category. Sydney’s current “meals out and takeaway foods” weighting is 4.9%, 

compared to Perth’s 3.91%, whereas Sydney’s current overall food weighting 

(excluding “meals out and takeaway foods”) is 10.7% compared to Perth’s 11.07%. 94 

5.3 Local economic impacts 

The total economic impact of independent retailers at a local or community level in WA 

is believed to be particularly significant, considering their large volume (81% of total 

stores) and their disproportionately high employment contribution as compared to their 

market share (ie grocery SMEs employ 54% of total grocery industry employees in 

WA, although they hold only 32% market share). Independent grocery retailers 

promote the localised accumulation and redistribution of wealth and source a larger 

proportion of their inputs on a local basis. 

Although the quantum of expenditure by MGRs is greater than that of SMEs on a 

national level, anecdotal evidence suggests that the margins and profits generated by 

the MGRs in WA are redistributed to shareholders, the majority of which live on the 

eastern seaboard where this wealth is subsequently accumulated. On the other hand, 

growth in profits generated by SMEs largely remains in WA to accumulate wealth in 

local areas. 

There is also a growing body of research, particularly from the USA, that investigates 

total aggregate economic impacts at a local level. Initial indications suggest that locally 

owned or independent retailers have greater contributory effects on local economies – 

that is, they have higher multiplier effects or indirect impacts – than major chain 

retailers. 

The studies highlight that independent retailers make an economic contribution at a 

local level (such as within local WA communities) that is two to three times greater 

than that of major chain retailers. The studies indicated that for every $1 spent in an 

independent retailer, the local economy gained approximately an additional 40¢ in 

economic recirculation and redistribution benefits, whereas only around a third of this 

value was generated at a local level by the presence of MGRs. 95 

This suggests that where independent grocery retailers lose market share in WA, local 

providers of goods and services as well as local producers and manufacturers may be 

likely to experience a downturn. As a result, if independents lose market share, it 

would be expected that benefits to the local economy would be lower as the local 

redistribution of incomes from independent grocers is reduced due to MGRs sourcing 

a greater proportion of their inputs from outside WA. 

The phenomenon of comparative local economic impacts of SME equivalents 

compared to MGRs from an array of studies are summarised in Box 7. 

94 ABS Cat. 6430. Weightings given according to the 15 th series CPI weighting pattern, established in September 2005. 

95 Calculated as an average of the multipliers found in the economic impact studies. 




Box 7: Comparative Economic Impacts – SMEs v MGRs 

There is a growing body of research from the United States which focuses on estimating the 

quantitative and qualitative economic impact and contribution of local independent retailers. Particular 

focus has been given to the role of independent retailers in the context of the growth of national chains 

or ‘big box’ retailers such as Wal-Mart. 

A large number of studies found that locally owned stores generate greater benefits for local 

economies, both quantitatively and qualitatively, than national chains, especially in regional areas. 

Several researchers further make the case for community governments to create policy to protect their 

independent businesses. 

“In a study comparing the economic impact of ten Andersonville businesses and their chain 

competitors, it was found that locally-owned businesses generate a substantial Local Premium 

in enhanced economic impact…For every $100 in consumer spending with chain firms, $43 will 

remain in the local economy; if that same spending occurs with a locally-owned firm, that value 

jumps by 58 per cent, to $68. Similarly, for every square foot of space occupied by a chain, the 

local economic impact is $105; if a local firm occupies that same space, impact jumps by 70 

percent, to $179.” 

Civic Economics, 2004, “The Andersonville Study of Retail Economics” (Chicago, Illinois) 

“When residents…spend $100 at a big box retailer, their purchase generates $14 in local 

spending by the retailer. That same $100 spent at a locally owned business generates $45 in 

local spending, or three times as much. Dollars spent at a local retailer support not only that 

store, but a variety of local businesses. 

“All eight [locally owned retailers] bank with locally owned banks. They purchase inventory from 

local manufacturers, and advertise in local newspapers, and hire local accountants, printers, 

internet service providers, and repair people. 

“A typical big box store spends 14.1 percent of its revenue within the local and state economy, 

mostly in the form of payroll. The rest leaves the state, flowing to out-of-state suppliers or back 

to corporate headquarters.” 

Institute for Local Self-Reliance, 2003, “The Economic Impact of Locally Owned Businesses vs. Chains, A 

Case Study in Midcoast Maine” 

“Local merchants generate substantially greater economic impact than chain retailers. 

“Development of urban sites with directly competitive chain merchants will reduce the overall 

vigor of the local economy. 

“Most changes in consumer spending habits can generate substantial local economic impact. 

For every $100 in consumer spending at Borders, the total local economic impact is only $13. 

The same amount spent with a local merchant yields more than three times the local economic 

impact. If each household in Travis county simply redirected just $100 of planned holiday 

spending from chain stores to locally owned merchants, the local economic impact would reach 

approximately $10 Million.” 

Civic Economics, 2002, “Economic Impact Analysis: A Case Study Local Merchants vs. Chain Retailers” 

“In many ways, [the trend of growing national chains] poses a threat to Santa Fe and results in a 

large outflow of money from the local economy. The impact of dollars spent at independent 

businesses deliver two times the economic impact of spending at national chains…Furthermore, 

small and independent businesses are an important way of preserving the local 

heritage…Support of small businesses goes hand in hand with supporting the culture of 

underrepresented groups and a venue for sharing art, crafts, and agricultural goods.” 

Angelou Economics, 2003, “Santa Fe Independent Business Report” 

“Big box retailers and superstores often can result in the reduction of consumer choice due to 

their tendency to cannibalize competing retail businesses…When a big retailer or superstore 

closes a store the huge vacancy created often results in a long term blighting condition and a 

significant reduction in the value of the property on which it was located as well as in the 

surrounding properties. It can also cause damage to local business.” 

Rodino Associates & Estela Lopez Consulting, 2003, “Final Report on Research for Big Box Retail / 

Superstore Ordinance” 

“By pricing groceries as “loss leaders” and using higher margin non-grocery items to make up 

the difference, supercenters often force existing supermarkets out of business. Because grocery 

stores anchor many neighbourhood business districts and shopping centers, their closure would 

harm other retailers and lead to vacancies…” 

Local First Vermont (http://localfirstvermont.org/resources/document.2006-08-29.5052203224) referring to 

Rodino Associates & Estela Lopez Consulting Report, 2003 




5.4 Social and community benefits of SMEs 

Beyond the quantitative economic impacts that SMEs provide, independent grocery 

retailers can generate significant social and environmental benefits for local 

communities and states as a whole. Whilst these benefits have often been quantified 

in economic terms, many of these benefits deserve to be mentioned on a qualitative 

basis to clearly establish the multi-functional economic impact of SMEs. 

A study compiled by the Institute for Local Self-Reliance with a focus on the state of 

Vermont in the USA 96 provided a list of clear economic, social and environmental 

benefits which are summarised below and are highly relevant to the WA state 

economy. 

5.4.1 Independent retailers contribute to community character 

and well-being 

Community retailing and local ownership contributes to local character and cohesion, 

and community well-being by ensuring important business decisions are made within 

the community by those who will feel the impact of those decisions. SMEs play an 

important role in improving community engagement and in the development and 

maintenance of a sense of local identity, cultural events and an active community life. 

In addition, SMEs typically locate on the ‘high street’ of towns and suburbs, and within 

these zones community interaction and engagement develop. This location also 

provides a mechanism for better connecting local communities. 

5.4.2 Independent retailers assist sustainable local economic 

prosperity 

Locally owned businesses generally reinvest a significantly larger share of revenues 

back into local and State economies than MGRs. In addition to keeping profits local, 

they often create opportunities for a variety of other local businesses and serviceproviders 

such as accountants, local papers and banks, repair and maintenance staff, 

and local suppliers. This is particularly evident in the fact that most of the services that 

supply the retail trade sector listed earlier (and expanded upon in Appendix A) are 

likely to be procured locally by SMEs rather than at a centralised location, as is the 

case for most MGRs. 

The contribution to local economic prosperity that locally owned businesses also make 

encompasses employment of more local people in proportion to their overall revenues 

when compared to MGRs (whose entry into local areas is also suggested to result in 

the decline in existing local businesses and thereby causing a net reduction in local 

jobs). 

Independent retailers also provide employment for the majority of supermarket and 

grocery employees. Independent retailers (in combination with MGRs), particularly in 

the retail sector, also provide many thousands of entry-level employment 

opportunities, and contribute to the development of transferable job skills (eg 

communication skills) and valuable attitudes to work and personal development 

among these employees. 

96 Mitchell, S. (2003), op. cit., pp. 3-10. 




5.4.3 Independent retailers promote entrepreneurship 

The growth in national chains is generally associated with a reduction in opportunities 

for entrepreneurs who face higher barriers to the grocery industry and greater 

competition due to oligopolistic nature of the grocery retailing market. 

In addition, entrepreneurship has often been considered “an equaliser” – offering lowincome, 

minority, immigrant and other disadvantaged socio-economic groups the 

opportunity to move out of low-wage jobs and engage in personal investment and 

economic innovation, thereby contributing to the prosperity of local economies as well. 

5.4.4 Independent retailers enhance competition and consumer 

choice 

The economic model of ‘perfect competition’ highlights that vigorous competition, low 

prices, and greater product diversity and quality over the long-term are generally 

associated with a larger number of small, independent businesses. Therefore, the 

strength and vitality of independent grocery retailers has a direct impact in enhancing 

customer focus, broadening consumer choice and providing increased competition for 

the MGRs, thereby requiring them to respond with superior products and services to 

attract consumers. 

The disappearance of local retailers and the growth in MGRs, who generally source 

from large manufacturers, may mean that small grocery manufacturers and primary 

producers find it increasingly difficult to obtain shelf space and consumer choice is 

reduced. 

5.4.5 Independent retailers provide environmental benefits and 

sustain local environments 

Smaller locally-owned businesses help maintain vibrant and walkable town centres, 

thereby limiting sprawl, vehicle use and pollution. Large national chain stores 

generally open in large malls and choose areas of land which are cheaper and faster 

to develop rather than opening in an established commercial district or town centre. 

The development of large car parks associated with MGRs and shopping malls in 

which they are located, and the store locations in general, also favour driving and 

discourage walking and public transport. Therefore, independent retailers help reduce 

traffic and parking congestion and help limit the detrimental environmental 

consequences associated with the development of large chain stores. 



6 Conclusion 

The economic contribution and participation of SMEs in the grocery industry is both 

significant in the Australian context, and is even more prominent in WA. SMEs play a 

vital role in sustaining competition, maximising consumer choice and in controlling 

long-term food inflation. 

Australia has one of the most concentrated retail grocery industries in the world. This 

dominance, whilst it is expected to offer consumers lower prices due to the economies 

of scale and lower unit costs, is generating growing concerns over the current high 

level of food price inflation and over the long-term implications for competition. The 

adverse impact of any reductions in the level of market share of SMEs would be likely 

to both further reduce the bargaining power of small primary producers and endanger 

consumer welfare in the form of reduced choice and less price competition. 

WA is an example where retail growth has been particularly strong, outperforming 

national growth since the mid-1990s and it continues to remain strong on the back of 

growth in the resources sector. SMEs have also played a more pronounced economic 

role in the supermarket and grocery industry, representing a greater proportion of total 

stores and having a level of market share that is more approximately 50% greater than 

independent retailers in any other Australian State and Territory. 

Whilst the overall level of independent retailing across Australia has remained 

relatively constant, ACNielsen data shows that the long-term trend in WA has been 

towards a shrinking independent retailing market. Should the market share of SMEs, 

currently approximately 32%, reduce to the size of the national average of 

approximately 20%, there is the risk that the benefits that WA currently experiences 

from independent retailers could be potentially lost. 

Where SMEs in the grocery retailing business close or are taken over by MGRs, the 

wealth generated from each business would be transferred, which in itself is not an 

economic cost. However, in the case of WA, it is most likely that this wealth would be 

transferred outside the State, and the local and regional benefits which the WA 

economy receives as a result of SMEs would be transferred to other States and 

Territories. 

There is also the “critical mass” argument; the concern that if independent grocery 

sales in WA were to fall by even 20%, it may not be viable any longer to keep the WA 

warehouse of IGA-Distribution (IGA>D) open. This would have a significant impact on 

local communities in WA, the WA economy and employment levels in particular. 

The greater market share of independent grocers in WA (32%) provides higher local 

employment and statewide economic benefits than if grocery retailing transitioned to 

the national average where independent grocers have a 20% market share. For 

example, if the market share of independent grocers in WA fell to 20% (all else held 

equal), this could translate into an approximately 3,800 fewer jobs in the grocery 

retailing sector in WA. 97 

97 This figure is calculated on the basis that if SMEs were to lose 10% market share in WA (or one-third of their market 

share), SME head count would reduce by a similar proportion (or 6,044 FTEs). This loss in employment would be mitigated 

by an increase in employment by MGRs proportionate to the 10% increase in market share (or 2,168 FTEs). Despite this, a 

net loss in employment of 3,876 FTEs (6,084 less 2,168) would be likely to result if the market share of independent 

grocery retailers reduces from approximately 30% to 20%. 



Conclusion 

A decrease in independent grocery market 

share in WA would also have detrimental 

impacts on businesses which support 

independent grocery retailers (e.g. local 

processors and manufacturers, accountants, 

printers, packaging suppliers, smaller primary 

producers and local storage, warehousing and 

wholesalers). Most of these support services 

would be likely to be procured interstate or 

centrally by MGRs. Therefore, the local 

businesses and employees supported by 

independent retailers, and the communities in 

which independent grocery retailers operate 

who gain significant social and community 

benefits as a result of the economic 

participation of SMEs, would be adversely 

impacted by any reduction in their market 

share. 

However, whilst it is predicted that there are risks associated with operating in one of 

the most concentrated grocery retail markets in the world, there are positive outcomes 

to be taken from the strong participation of SMEs in the grocery retailing industry. 

The rationalisation of SMEs into banner groups such as IGA and FoodWorks and their 

alliance with Metcash will be crucial in allowing independent retailers to strengthen 

their position in the market and to challenge the MGRs. The ability of SMEs to provide 

value-add to consumers through factors such as convenience, tailored product range 

and customised store layout for local needs will also be important to their ongoing 

economic participation and success. 

PwC’s 2007 publication of Retail & Consumer Outlook Australia – Changes in play 

highlights that: 

“While independent retailers can feel confident that they have a bright 

future, they still have to plan how they will deal with the tectonic forces 

generated by Australia’s two grocery retailing giants.” 

Therefore, it is important that policymakers are cognisant of the policy settings 

pertinent to the retailing industry. This will be critical to ensuring that the regulatory 

and compliance burden placed on retailers is not disproportionately felt by SMEs. It is 

also important to making certain that competition is promoted in the grocery industry 

and that competitors are not disadvantaged by the extending dominance of MGRs 

under pressure to deliver increased earning. 

It is also important that the significant beneficial economic impact of SMEs is 

acknowledged and appreciated. Whilst it may be a small component of the total 

economy and MGRs generate significantly greater volumes of sales, SMEs constitute 

the majority of grocery stores and make a critical contribution in their own right to 

servicing customers in more regional and remote areas, as well as providing greater 

choice for consumers. Independent retailers have an economically valuable role as a 

balancing competitive force against the MGRs and as enhancers of consumer choice 

and welfare in the grocery retailing industry. 



Appendix A 

Intra-industry flows into retail trade 

Input by Industry and Final Use Category and Supply by 

Product Group 1996-97 

SUPPLY 5101 

USE 

Retail trade 

0101 Sheep 

0102 Grains 

0103 Beef cattle 

0104 Dairy cattle 

0105 Pigs 

0106 Poultry 2.4 

0107 Other agriculture 121.6 

0200 Services to agric.; hunting 

0300 Forestry and logging 0.2 

0400 Commercial fishing 134.2 

1100 Coal; oil and gas 52.8 

1301 Iron ores 

1302 Non-ferrous metal ores 

1400 Other mining 1.5 

1500 Services to mining 

2101 Meat and meat products 808 

2102 Dairy products 226.9 

2103 Fruit and vegetable products 28.3 

2104 Oils and fats 42.6 

2105 Flour and cereal foods 136.1 

2106 Bakery products 75.2 

2107 Confectionery 50.1 

2108 Other food products 97.2 

2109 Soft drinks, cordials, syrups 17 

2110 Beer and malt 0.5 

2111 Wine and spirits 1.6 

2112 Tobacco products 

2201 Textile fibres, yarns etc 7.2 

2202 Textile products 83 

2203 Knitting mill products 16.3 

2204 Clothing 51.4 

2205 Footwear 10.4 

2206 Leather and leather products 1.1 

2301 Sawmill products 38.8 

2302 Other wood products 241.7 

2303 Pulp, paper and paperboard 6.6 

2304 Paper bags and products 185.7 

2401 Printing; services to printing 1,413.00 

2402 Publishing; recorded media etc 1,018.50 

2501 Petroleum and coal products 212.6 

2502 Basic chemicals 3.6 

2503 Paints 5.1 

2504 Pharmaceuticals etc 1.7 

2505 Soap and detergents 4.6 

2506 Cosmetics and toiletries 0.4 

2507 Other chemical products 3.2 

2508 Rubber products 68.4 

2509 Plastic products 84.5 

2601 Glass and glass products 9 

2602 Ceramic products 3.4 

2603 Cement, lime and concrete slurry 3.5 

2604 Plaster; other concrete products 1.4 

2605 Non-metallic min. products nec 9.6 

2701 Iron and steel 6 

2702 Basic non-ferrous metals etc 1.9 

2703 Structural metal products 0.6 

2704 Sheet metal products 147.8 

2705 Fabricated metal products 117.9 

2801 Motor vehicles and parts etc 371.7 



Intra-industry flows into retail trade 

Input by Industry and Final Use Category and Supply by 

Product Group 1996-97 

SUPPLY 5101 

USE 

Retail trade 

2802 Ships and boats 

2803 Railway equipment 

2804 Aircraft 0.1 

2805 Scientific etc equipment 4.5 

2806 Electronic equipment 2.7 

2807 Household appliances 69.5 

2808 Other electrical equipment 64.6 

2809 Agricultural, mining etc machinery 4.6 

2810 Other machinery and equipment 13.4 

2901 Prefabricated buildings 0.2 

2902 Furniture 7.1 

2903 Other manufacturing 92.4 

3601 Electricity 350.9 

3602 Gas 28.6 

3701 Water, sewerage and drainage 14.6 

4101 Residential building 

4102 Other construction 2.3 

4501 Wholesale trade 688 

5101 Retail trade 106.7 

5401 Mechanical repairs 386.9 

5402 Other repairs 1,327.00 

5701 Accommodation, cafes & restaurants 505.1 

6101 Road transport 187.8 

6201 Rail, pipeline, other transport 57.5 

6301 Water transport 15.3 

6401 Air and space transport 294 

6601 Services to transport; storage 421.3 

7101 Communication services 2,242.50 

7301 Banking 746.8 

7302 Non-bank finance 207 

7401 Insurance 332.3 

7501 Services to finance etc 35.6 

7701 Ownership of dwellings 

7702 Other property services 2,012.40 

7801 Scientific research etc 349 

7802 Legal, accounting etc services 4,057.10 

7803 Other business services 1,837.70 

8101 Government administration 177.6 

8201 Defence 

8401 Education 55.6 

8601 Health services 14 

8701 Community services 

9101 Motion picture, radio etc 508.2 

9201 Libraries, museums, arts 31 

9301 Sport, gambling etc 6.5 

9501 Personal services 75.7 

9601 Other services 46.5 

T1 Total Intermediate Uses 23,307.50 

P1 Compensation of employees 17,944.70 

P2 Gross operating surplus & mixed income 2,305.50 

P3 Taxes less subsidies on products 1,046.40 

P4 Other taxes less subsidies on production 1,059.90 

P5 Complementary imports 

T2 Australian Production 45,664.00 

P6 Competing imports 196.8 

T3 Total uses 45,860.80 

V1 Gross value added (P1 + P2 + P4) 21,310.10 

Source: ABS, Cat. 52090 (Input-Output Tables 1996-97)

The economic contribution of small to medium-sized grocery ...

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